SEBI data: Small-cap funds take longer than mid-caps to liquidate

Imagine you have two piggy banks - one filled with very popular toys many people want, and another with rare toys not many people want.

If you want to sell your toys to get money back, the rare toys are much harder to sell quickly.

A mutual fund is a bit like a big basket of investments, and some baskets hold shares of small companies, which are like rare toys because fewer people trade them.

A report from SEBI, India's market watchdog, found that in March 2026 baskets of small-company shares took about 38 days to sell half their contents.

Baskets with bigger, more popular companies took only about 17 days.

Experts say funds that invest in small companies must keep at least 65% of their money there, which makes selling harder in a hurry.

This doesn't automatically mean the fund is bad or that you should panic.

But it's smart to keep an eye on monthly stress-test reports, which show how long it might take to sell things during tough times.