New Delhi, July 25 -- The latest stress test of small and mid-cap mutual funds reveals that some of these schemes are still hovering at high valuations. No wonder then the small fund schemes will take a long time to liquidate their portfolio if too many redemption requests are placed together.

Let us suppose, all the investors in asmall cap scheme decide to exit half of their positions -- how long should the fund house take to redeem the scheme's assets before transferring the proceeds to investors' accounts? It is normal if the time period is two days (considering the T+2 settlement cycle). Maybe one week could be a stretch!

But what if the AMC takes as long as one month or longer to liquidate half of its assets. Or 52 days? Isn't it t...