Mutual Fund Cash Holdings Hit 16-Month Low Amid Equity Buying Surge
Mutual fund cash levels drop 12% to Rs 1.86 lakh crore, hit 16-month low in March amid aggressive equity buying
The Economic Times
Image: The Economic Times
In March, mutual fund cash holdings in India dropped 12% to ₹1.86 lakh crore ($22.4 billion USD), marking a 16-month low. This decline occurred as fund houses aggressively deployed cash to capitalize on market corrections despite ongoing geopolitical tensions and rising crude oil prices.
- 01Mutual fund cash holdings fell to ₹1.86 lakh crore, a 16-month low.
- 02The cash allocation as a percentage of total assets under management (AUM) decreased to 4.72%.
- 0329 out of 49 asset management companies (AMCs) actively deployed cash for equity purchases.
- 04SBI Mutual Fund and PPFAS Mutual Fund held the largest cash reserves among AMCs.
- 05The decline in cash holdings reflects a strategic shift towards equity investment amid market volatility.
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In March, mutual fund cash holdings in India decreased by ₹24,184 crore ($2.9 billion USD), falling to ₹1.86 lakh crore ($22.4 billion USD), the lowest level in 16 months. This represents a 12% decline from the previous month. The cash allocation as a percentage of total assets under management (AUM) also fell to 4.72%, down from 4.89% in February. The total equity AUM stood at ₹39.25 lakh crore ($471 billion USD). Despite geopolitical tensions and rising crude oil prices, 29 out of 49 asset management companies (AMCs) utilized their cash reserves to invest in equities during the market correction. Notably, SBI Mutual Fund maintained the highest cash reserves at ₹27,463 crore ($3.3 billion USD), while PPFAS Mutual Fund had ₹29,327 crore ($3.5 billion USD), accounting for 21.76% of its total AUM. The trend indicates a strategic pivot among fund managers towards equity investments, aiming to leverage potential market opportunities.
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The decline in mutual fund cash levels indicates a shift towards equity investments, which may provide opportunities for investors looking to enter the market at lower valuations. This could influence market dynamics and investor strategies.
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