10 mutual fund houses increase cash holding. Should you worry?

Around 10 mutual funds have increased their cash holding in July compared to that in June, data crunching by ETMutualFunds showed. The average cash holding by these 10 fund houses in July was 8.82% of their assets vis-a-vis 4.76% in June.

Samco Mutual Fund holds over 20% cash in July. The fund house holds 21.01% of its assets in cash. Quant Mutual Fund holds more than 15% cash. Shriram Mutual Fund holds around 12% of its assets in cash. (see table for details)

Groww Mutual Fund, JM Mutual Fund, Union Mutual Fund, PGIM India Mutual Fund, and Franklin Templeton Mutual Fund hold over 4 -7% of their assets in cash.


Samco Mutual Fund has increased its cash holdings tremendously. From 2.99% of AUM in June to 21.01% in July, Samco Mutual Fund increased the percentage of assets under management by 18.02%.


These 10 mutual fund houses together are sitting on Rs 11,060 crore cash pile. Among these 10 fund houses, Franklin Templeton Mutual Fund has the highest equity asset under management of Rs 56,806.40 crore.

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.

The increase in cash holdings as a percentage of the assets by mutual funds indicates that the fund houses are moving cautiously in the current market scenario. New fund houses like Samco may typically try to hold cash and wait for bargain hunting in a likely correction. Some conservative mutual funds like PPFAS always hold cash when they sense the market has become expensive.

By looking at this move by the fund houses, investors should not make investment or redemption decisions. Predicting the market and moving accordingly is not possible. One thing that investors need to do is continue making investments to create wealth over a long period of time. Also, you need to take cash calls when your fund manager is doing it for you.

Some prominent mutual funds such as ICICI Prudential Mutual Fund (7.49%), Franklin Templeton Mutual Fund (6.61%), Axis Mutual Fund (6.45%), HDFC Mutual Fund (6.42%), Tata Mutual Fund (5.62%) and Kotak Mutual Fund (3.62%), and SBI Mutual Fund (3.06%) held a nominal percentage of their assets in cash in July.