Increased cash near equity funds – Equity Funds Increased Cash

Equity schemes of mutual funds had a lot of cash earlier this month, while the new investment in February has shrunk.
According to Motilal Oswal’s report, till February 28, the portfolio of equity schemes of 20 leading fund companies had 6.8 per cent cash, 6.1 per cent in January and 5.9 per cent in December 2024. This is the highest cash after at least May 2021.

The cash level is often seen as the market outlook of fund managers. Mutual funds, however, insist on the imperative to remain fully invested. But they keep strategically cash during the market uncertainty, expectation of further shopping opportunities or highly assessed periods.

But experts say that the change in cash levels in equity schemes may also be temporary, which is possible due to significant adjustment of portfolio or rapid investment or much more withdrawal at the end of the month.

The stock market has been going through a decline for the last several months. In February, he declined the fifth consecutive month. The benchmark Nifty 50 index declined by 5.9 per cent while the midcap and smallcap index recorded a softening of more than 10 per cent.

Despite the softening of equity evaluation due to the recent decline, the fund managers insist that evaluation in other shares by piercing largecap remains expensive. Smallcap and midcap shares (which attract most investment of mutual funds) continue to trading on a large premium compared to largecap. However, this premium has decreased in recent months.

According to a Tata MF note, the evaluation premium of the Nifty Midcap 100 was reduced to 47 per cent by the end of February 2025 as compared to the Nifty 50, which is significantly below the high level of about 71 per cent in July 2024. Similarly, the evaluation premium of smallcap against the Nifty 50 also came down to 25-30 percent in February.

Among the 20 leading fund companies, SBI, Axis and Tata had a significant increase in cash in February. But only four fund companies Axis, Quant, Motilal Oswal and Parag Parikh had cash levels of more than 10 per cent. Fund managers indicate that there may be short -term distress in the market but the decline has created attractive opportunities of shopping for long -term investors.

SBI Fund said in a recent note, the existing mess of the market offers a good level of admission to long -term investors. The medium to long -term landscape for Indian equity is associated with an increase in the cycle of income. We are short -term

First Published – March 17, 2025 | 10:19 PM IST

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