Equity funds hoard cash as managers await right entry time

King cash Cash holding in actively managed equity funds hit their highest in over 6 years, last seen in 2018 and 2011.

- Dipti Sharma

Cash levels in actively managed equity mutual fund schemes have climbed to their highest in over six years, signaling a cautious stance even as fund managers await the right entry points.

The three-month average cash level in active equity mutual fund schemes stood at 6.2% in March, the highest in over six years, and up from 5.7% in January and 6.0% in February, show data compiled by Elara Capital. Cash holding levels typically average 3-4%.

The last time cash positions were this elevated was in November 2018, at 6.3%, and in November and December 2011, at 6.4%, the data showed.

Mahesh Patil, chief investment officer at Aditya Birla Sun Life AMC, said a rough calculation suggested that active equity schemes managed over ₹28 trillion, and typically have an average cash holding of around 3%, which would be about ₹84,000 crore. With cash levels now at about 6%, there would be another ₹84,000 crore waiting to be deployed, he said.