Are MF stress tests of any use?

These are usually found among small and midcaps. It is not easy to find such stocks, especially after a strong bull market

In early March this year, alarmed by the flood of money rushing into smallcap funds, after a massive one-year bull run, the market regulator asked mutual funds to consider moderating flows and rebalancing portfolios, since the flows could make the market frothier. The Securities and Exchange Board of India (Sebi) also asked mutual funds to conduct a “stress test” for small and midcap schemes and publish the results. The stress test covers liquidity, volatility, valuation and portfolio turnover in such schemes, “along with guidance in simple language, assumptions and methodology, to enable the investor to understand the risk associated”. The