New Delhi, Feb. 26 -- Several small-cap mutual funds managing large assets will likely need more days than usual to liquidate their portfolios if the need arises, according to the lateststress test data sourced by India's apex mutual fund body.

This crucial metric for stress tests, as mandated by the Securities and Exchange Board of India, indicates higher liquidity risks in thesmall-cap segment even as investors flock to these stocks, lured by their promise of high returns. According to some experts, a high liquidity risk could also point to the low quality of a fund's investments.

On average, the time required to liquidate 50% of a small-cap fund portfolio has increased by 39.4 days between the first such stress test conducted in Febr...