Among major fund houses, ICICI Prudential Mutual Fund held the highest cash reserves at over Rs 32,800 crore
Amid buoyant equity markets and a renewed inflow of foreign investments, active equity mutual funds maintained elevated cash buffers in October, reflecting fund managers’ continued caution despite the market rally.
According to data from ACE Equities, aggregate cash holdings in active equity schemes inched up to 4.11 percent in October from 4.10 percent in September. In absolute terms, cash reserves climbed to Rs 2.09 lakh crore from Rs 1.99 lakh crore a month earlier.
This came even as Indian equities advanced, buoyed by foreign investors who purchased over $1.6 billion worth of shares during the month, encouraged by expectations of a trade agreement with the US and strong September-quarter earnings.
Market analysts noted that while fund managers often retain cash to manage volatility, such defensive positioning carries its own challenges. The prevailing caution, they said, stems from stretched valuations across market segments compared with historical averages. Most fund houses prefer not to take aggressive cash calls, instead aligning deployment with earnings momentum and valuation comfort.
Among major fund houses, ICICI Prudential Mutual Fund held the highest cash reserves at over Rs 32,800 crore, accounting for around 6.5 percent of its assets under management (AUM). SBI Mutual Fund and Parag Parekh Mutual Fund followed with cash holdings of around Rs 31,900 crore and Rs 29,160 crore, representing 4.2 percent and 22.2 percent of their respective AUMs.
HDFC Mutual Fund (Rs 28,740 crore), Quant Mutual Fund (Rs 10,366 crore), Axis Mutual Fund (Rs 8,486 crore), Motilal Oswal Mutual Fund (Rs 8,460 crore), and Nippon India Mutual Fund (Rs 7,024 crore) were also among those with significant cash levels.
Motilal Oswal and 360 One Mutual Funds recorded notable increases in cash as a percentage of AUM, rising to 7.2 percent and 4.5 percent in October from 5.4 percent and 2.8 percent, respectively. ICICI Prudential, Quant, and Invesco Mutual Funds also reported higher cash ratios, climbing to 6.5 percent, 11.8 percent, and 3.9 percent from 5.33 percent, 10.9 percent, and 3.2 percent in September.
Conversely, several fund houses reduced their cash exposure sharply. Samco Mutual Fund saw its cash holdings drop to 11.9 percent of AUM from 25 percent a month earlier. NJ Mutual Fund and Old Bridge Mutual Fund trimmed their cash positions to 0.5 percent and 7.5 percent from 5.5 percent and 10.6 percent, respectively.
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Other funds, including Baroda BNP Paribas, Shriram, WhiteOak Capital, Trust, Quantum, and Groww Mutual Funds, also recorded notable declines in cash levels.