The Securities and Exchange Board of India (Sebi) has urged the mutual fund industry to take proactive measures by conducting stress tests. This move is aimed at assessing the resilience of mutual funds in times of market volatility and economic downturns.
Stress tests involve simulating various scenarios to evaluate how mutual funds would perform under adverse conditions. By conducting these tests, fund managers can identify any potential vulnerabilities and take necessary steps to mitigate risks.
Sebi’s directive highlights the importance of risk management and ensuring the stability of the mutual fund industry. By being proactive in conducting stress tests, fund managers can better prepare for uncertainties and safeguard the interests of investors.
It is crucial for mutual fund companies to comply with Sebi’s guidelines and regularly assess their risk management practices. By taking proactive measures, the industry can enhance its overall resilience and protect the investments of millions of investors.