# Small-cap funds hit record inflows, SEBI flags liquidity risk

2026-08-10T22:19:49+00:00 | Business & Economy | Indian Opinion Desk

Corroboration: 2 independent outlets

Net inflows into small-cap mutual funds hit a record Rs 7,768 crore in July, even as overall equity inflows fell 15% to Rs 24,697 crore, according to data from the Association of Mutual Funds in India. But a SEBI annual report cited by Livemint reveals that the top 10 small-cap schemes took an average of 38 days to sell half their portfolios in March 2026, compared with 17 days for mid-cap funds. Among the top five small-cap funds, the liquidation time stretched to 51 days. Experts quoted by Livemint caution that lower liquidity in small-caps can force fund managers to sell at lower prices during heavy redemptions, hurting all investors. While the AMFI monthly stress tests are hypothetical, investors should watch for consistently rising liquidation times, which signal growing exposure to illiquid stocks.

## Coverage

- livemint.com <https://www.livemint.com/money/personal-finance/top-5-small-cap-funds-can-take-28-days-longer-than-mid-caps-to-sell-half-of-their-portfolios-experts-discuss-risks-11786378323474.html>
- rediff.com <https://www.rediff.com/business/report/equity-mf-inflows-fall-15-in-july/20260812.htm>

Tags: investing, liquidity risk, mutual funds, SEBI, small-cap, stress test
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