As markets turned volatile, 63% of mutual funds raised cash levels in February

About 63 percent of mutual fund houses increased cash holdings in their equity schemes in February amid market volatility, according to data from the Prime MF Database. During the month, Sensex was down 1.2 percent while Nifty was down 0.6 percent Of the 48 fund houses analysed, 30 increased their cash positions during the month while 18 reduced them. Equity mutual funds held Rs 1.36 lakh crore in cash at the end of February, marginally higher than Rs 1.35 lakh crore in January. However, as a proportion of assets, cash levels were largely unchanged at 2.62 percent of equity assets in February compared with 2.63 percent a month earlier, indicating that fund managers broadly remained invested despite volatile market conditions. Part of the cash build-up can also be attributed to fresh inflows from new fund launches during the month, which typically remain in cash before being deployed into equities. During February, 21 open-ended schemes mobilised about Rs 4,979 crore, while one close-ended scheme raised Rs 378 crore, taking the total funds mobilised through new fund offers (NFOs) to around Rs 5,357 crore. Equity-oriented schemes accounted for the bulk of these inflows, raising Rs 3,955 crore. SBI Mutual Fund’s SBI Quality Fund alone mobilised Rs 2,245 crore, making it the largest equity NFO during the month. Other launches included Kotak Mahindra Mutual Fund’s Kotak Services Fund, which raised Rs 760 crore, and Edelweiss Mutual Fund’s Financial Services Fund that collected Rs 224 crore. Motilal Oswal Mutual Fund’s Financial Services Fund mobilised Rs 154 crore, while Jio BlackRock Mutual Fund’s Sector Rotation Fund raised Rs 98 crore. Larger MFs lead the list Among fund houses, SBI Mutual Fund held the largest cash balance at Rs 26,101 crore at the end of February. It was followed by HDFC Mutual Fund with Rs 19,453 crore and ICICI Prudential Mutual Fund with Rs 15,514 crore. Axis Mutual Fund and Kotak Mahindra Mutual Fund were among the other large holders with Rs 10,892 crore and Rs 4,592 crore, respectively. In terms of monthly changes, SBI Mutual Fund added the most cash in absolute terms, increasing its holdings by Rs 4,597 crore, or about 21 percent, during February. Quant Mutual Fund followed with an increase of Rs 3,576 crore, representing a 219 percent surge from January levels. The jump took Quant’s cash holdings to Rs 5,210 crore and lifted its cash allocation to 7.28 percent of equity assets. ICICI Prudential Mutual Fund also increased its cash position significantly, adding Rs 2,831 crore, a 22 percent rise from the previous month. Kotak Mahindra Mutual Fund raised cash by Rs 1,023 crore, while DSP Mutual Fund increased its holdings by Rs 942 crore, translating into a 23 percent increase month-on-month. On the other hand, HDFC Mutual Fund recorded the steepest fall in cash holdings in absolute terms, reducing its cash by Rs 8,236 crore, a 30 percent decline during the month. Motilal Oswal Mutual Fund cut its cash position by Rs 2,534 crore, or about 48 percent, while PPFAS Mutual Fund trimmed Rs 2,043 crore, a 29 percent drop. Axis Mutual Fund and Nippon India Mutual Fund also reported sizeable reductions in cash holdings. Smaller AMCs lead as a percentage of AUM In terms of cash relative to assets, Old Bridge Mutual Fund had the highest allocation, with cash accounting for 15.48 percent of equity assets, followed by Bank of India Mutual Fund at 13.14 percent and Capitalmind Mutual Fund at 10.94 percent. Among the biggest increases in cash allocation, Bank of India Mutual Fund saw the sharpest rise, with its cash ratio climbing 5.35 percentage points to 13.14 percent in February from 7.78 percent in January. Quant Mutual Fund followed with a 4.97 percentage point increase to 7.28 percent from 2.31 percent, while Old Bridge Mutual Fund also reported a notable rise. At the other end, Samco Mutual Fund recorded the steepest fall in cash allocation, with its cash ratio plunging 36.89 percentage points to 1.85 percent in February from 38.74 percent in January. Capitalmind Mutual Fund saw its cash allocation drop 24.33 percentage points to 10.94 percent from 35.27 percent, while Abakkus Mutual Fund reduced its cash ratio by 9.70 percentage points to 6.08 percent from 15.78 percent.