Mutual funds use inflows to stuff another Rs 17,300 crore in their cash bag

Amid rise in equity markets and slowing equity inflows, the cash pile of mutual funds has increased by Rs 17,361 crore on a monthly basis to Rs 2.23 lakh crore in April from Rs 2.05 lakh crore in March.

The cash allocation as a % of total AUM was 5.86% in March which went up to 6.12% in April. The total equity AUM in April was recorded at Rs 36.48 lakh crore.

Among the 44 fund houses, seven had over Rs 10,000 cash in their portfolios. SBI Mutual Fund, the largest fund house, had the highest cash allocation in its portfolio in April of Rs 38,043 crore which was 5.47% of the total AUM.


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ICICI Prudential Mutual Fund had Rs 30,591 crore cash in its portfolio, followed by HDFC Mutual Fund had Rs 25,697 crore cash in its portfolio which was 6.68% of the total AUM.

PPFAS Mutual Fund had Rs 24,426 crore cash in its portfolio which was 23.57% of the total AUM. Axis Mutual Fund and Motilal Oswal Mutual Fund had Rs 15,826 crore and Rs 12,683 crore cash in their respective portfolios.

Quant Mutual Fund had Rs 10,862 crore in its portfolio which was 13.05% of its total AUM. The fund house in its monthly release mentioned that, “The high cash levels in most of the schemes have been deployed in select small caps and their portfolio remains tilted towards large and mega large caps and overall liquidity of the portfolio is good.”

Kotak Mutual Fund had around Rs 6,804 crore cash in its portfolio, followed by Franklin Templeton Mutual Fund which had Rs 5,876 crore cash in its portfolio. Mirae Asset Mutual Fund had around Rs 1,591 crore cash in its portfolio which was 1.06% of the total AUM.

Also Read | High cash levels deployed in small caps across schemes, says Quant Mutual Fund

Edelweiss Mutual Fund had Rs 1,055 crore cash in its portfolio, followed by Mahindra Manulife Mutual Fund which had Rs 850 crore cash in its portfolio.

Trideep Bhattacharya of Edelweiss Mutual Fund told ET Now that the rally in the market which has happened from roughly about Jan, Feb, mid to now, broadly reflects coming out of macro uncertainty and still kind of lower than all-time highs.

“We have held very little cash in our portfolios. But we think that the macro-based rally is broadly done. Going forward, it will be closely related with regards to earnings estimates coming back and forth which we think will take a couple of quarters more, broadly by the second half of fiscal year 26 when earnings start to kick in gear,” he added.

Around 21 AMCs had less than Rs 1,000 crore cash in its portfolio in the said period, of which six had less than Rs 100 crore cash including two AMCs which had less than Rs 10 crore cash in their portfolio.

Based on cash as a percentage of AUM, PPFAS Mutual Fund had 23.57% cash as a percentage of AUM, followed by Motilal Oswal Mutual Fund which had 14.50% cash as a percentage of AUM.

The cash in Quant Mutual Fund’s portfolio was 13.05% as a percentage of AUM. SBI Mutual Fund had the highest equity AUM of Rs 6.57 lakh crore in April, followed by ICICI Prudential Mutual Fund and HDFC Mutual Fund which had Rs 4.02 lakh crore and Rs 3.59 lakh crore equity AUM respectively.

Also Read | BSE and One 97 among stocks that mutual funds bought and sold in April

Fund managers are allowed to keep a part of their portfolio in cash to meet events like redemptions or make investments when they see a possible opportunity in the market.

India is experiencing high volatility due to global cues such as geo politics and trade tariffs, slowing earnings cycles, valuations coming off from highs etc. and the valuations have cooled-off in the last few months, although still remains high, according to a release by ICICI Prudential Mutual Fund.

The fund house believes that strong fundamentals coupled with high valuations creates a strong case for investing in Hybrid and Multi asset allocation schemes and they prefer large-caps over mid and smallcap schemes due to reasonable valuations plus possibility of FPIs making a comeback which may result in outperformance.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)