Mutual funds reduces overall cash allocation by Rs 6,200 crore to Rs 2.17 lakh crore in May

Mutual funds have reduced their overall cash allocation by Rs 6,240 crore on a monthly basis to Rs 2.17 lakh crore in May. The cash allocation reported in April was Rs 2.23 lakh crore.

The cash allocation of the total AUM dropped to 5.66% in May as compared to 6.12% reported in April. The total equity AUM in May was recorded at Rs 38.33 lakh crore.

Among the 44 fund houses, six had over Rs 10,000 cash in their portfolios in the said period. SBI Mutual Fund, the largest fund house, had the highest cash allocation in its portfolio in May of Rs 34,747 crore, which was 4.86% of the total AUM.



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HDFC Mutual Fund had Rs 27,133 crore cash in its portfolio in the mentioned period, followed by ICICI Prudential Mutual Fund which had Rs 26,752 crore cash in its portfolio which was 5.92% of the total AUM.

PPFAS Mutual Fund had Rs 23,598 crore cash in its kitty, which was 21.62% of the total AUM. The next fund house in the list was Motilal Oswal Mutual Fund, which had Rs 13,168 crore cash in its portfolio in the same time period. Axis Mutual Fund had Rs 13,044 crore cash in the portfolio.

“From our own perspective, we are sitting on a very limited level of cash. We have not taken an outright bearish view across in terms of just the cash levels. So, we have not taken a massive cash call there. So, we do have cash to deploy, but it is not out of whack,” Karthik Kumar, Fund Manager, Axis Mutual Fund shared with ETNow.

Quant Mutual Fund had Rs 9,028 crore cash in its portfolio. The fund house in its monthly release mentioned that the cash levels have been deployed in select mid and small caps in most schemes.

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Kotak Mutual Fund had Rs 7,894 crore cash in its kitty which was 3.46% of the total AUM. Around 21 fund houses had less than Rs 1,000 crore cash in their respective portfolios, of which eight had less than Rs 100 crore cash.

Edelweiss Mutual Fud had Rs 1,093 crore cash in its portfolio which was 3.33% of the total AUM. “Every time the market dips, investors applaud those sitting on piles of cash. But Edelweiss Mutual Fund follows a different playbook — keeping cash levels around 2–3%, and never breaching even 10%,” Radhika Gupta, MD and CEO of Edelweiss Mutual Fund shared with ETMarkets.

Based on cash as a percentage of AUM, PPFAS Mutual Fund had 21.62% cash as a percentage of AUM, followed by Motilal Oswal Mutual Fund had 13.56% cash as a percentage of AUM.

Quant Mutual Fund had around 10.35% cash as a percentage of AUM. HDFC Mutual Fund had 6.75% cash as a percentage of AUM. Mahindra Manulife Mutual Fund had 3.12% cash as a percentage of AUM.

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SBI Mutual Fund had the highest equity AUM of Rs 6.80 lakh crore in May, followed by ICICI Prudential Mutual Fund and HDFC Mutual Fund which had Rs 4.25 lakh crore and Rs 3.74 lakh crore equity AUM respectively.

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.

“We typically do not keep more than 5-7% cash, so we are not sitting on large amounts of cash, but in general the MF industry has normal levels of cash, nothing to write home about in sense it is not extraordinarily high or extraordinarily low. There is enough ammunition on the sidelines and we can see that in the daily numbers MFs are buying on a daily basis,” Mihir Vora, CIO, Trust Mutual Fund shared with ETNow.