Cash Holdings in Active Equity Mutual Funds Hit Peak Levels Since May 2023

Active Equity Funds Hold Most Cash Since October 2024

An active mutual fund is a kind of mutual fund, in which professional managers take decisions regarding the selection of securities to outperform a benchmark index.

The professionals primarily purchase and sell assets depending on market conditions, research, and analysis to gain superior returns over the general market.

Actively managed equity mutual funds, which charge higher fees for such active management, still held substantial cash reserves in October: Prime Database MF data showed that cash holdings rose to 4.91% of the category’s assets, their highest since May 2023.

These funds are categorised into multi-cap, large-cap, mid-cap, small-cap, and thematic equity funds totalling around ₹30 lakh crore in terms of assets under management as of the end of the month.

In an overall average, Cash holdings across all active equity funds stood marginally lower at ₹1,46,957 crore, compared with ₹1,47,588 in September 2024.

Cash Holdings Across Fund Categories Soared Overall

In industry terms, the cash component as a percentage of total mutual fund AUM advanced to 5.64%, or ₹3.77 lakh crore by October-end. This is the highest level since February 2022, when industry cash holdings had hit Rs 4.19 lakh crore.

The uptick in cash holdings comes at a time when Foreign Institutional Investors were on a selling spree in the Indian equity market, while mutual funds continued buying.

This trend indicates that Domestic Institutional Investors (DIIs) remain committed to equity investments, while institutions are cautious, awaiting better investment opportunities.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.