This reflects cautious sentiment amid market uncertainty and expectations of a surge in supply.
Cash levels in equity mutual funds have risen consistently over the past six months. From 5.7% of equity AUM in November 2024, the average cash holding increased to 7% by April 2025.
Among the major fund houses, SBI Mutual Fund holds the highest absolute cash at ₹36,000 crore, followed by ICICI Prudential with ₹28,000 crore and HDFC Mutual Fund at ₹25,000 crore.
When seen as a percentage of equity assets, PPFAS Mutual Fund leads with a high 23.6% in cash. Motilal Oswal Mutual Fund follows at 17.5%, and Quant Mutual Fund holds 13%.
Other prominent players include SBI MF (10%), Axis MF (8.6%), ICICI Prudential MF (8.2%), and HDFC MF (7.5%).
There are three main reasons driving this cash build-up:
Volatility cushion: Fund managers are holding cash as a buffer against unpredictable market movements.
Anticipated supply wave: The market is expected to see a rush of new paper, including Offer-for-Sale (OFS) transactions, expiring IPO lock-ins, and upcoming large issuances.
Favourable macro triggers: Factors such as falling crude oil prices, a stable rupee, expectations of rate cuts by the RBI, and signs of foreign institutional investor (FII) interest may prompt deployment of these funds in the near term.
The rising cash pile indicates that mutual funds are preparing to act when market conditions align. The big money is ready—waiting for the right moment to move.
(Edited by : Anshul)
First Published: May 16, 2025 4:31 PM IST