New Delhi, Aug. 22 -- While small- and mid-cap mutual funds continue to remain risky, retail investors have been increasing their exposure to these funds. In July, investors invested Rs.6,484 crore in small cap mutual funds and Rs.5,182 crore in mid cap funds. The corresponding data for June stood at Rs.4,024 crore and Rs.3,754 crore, respectively.

Since April, inflows into small- and mid-cap mutual funds have increased by 62 percent and 56 percent, respectively, over three months, according to the latestAMFIdata.

However, small and mid cap funds by definition are quite risky. All mutual fund houses are supposed to revealstress test every month, which indicates their vulnerability. The stress test reveals how long it will take to liquid...