Mutual Funds Step Up Equity Buying; Cash Buffer Holds, Ratio Dips: Mutual funds stayed net buyers of equities in December, ramping up deployment to ₹38,939 Cr, including IPO allocations. Supported by steady inflows and record SIPs, cash holdings edged up to ₹2.08 lakh Cr from ₹2.02 lakh Cr in November—however, with Equity AUM rising, the cash-to-Equity AUM ratio declined, reflecting higher equity deployment.
AMC Cash Levels Decline Further in December: The average cash holding ratio across the top 20 Asset Management Companies eased to 3.83% in December, down from 4.06% in November, as rising equity AUM and sustained market deployment continued to absorb surplus cash. The further moderation keeps industry cash levels comfortably below the 5% mark, underscoring continued risk-on sentiment, strong investor confidence and fund managers’ preference to remain largely invested amid stable and resilient market conditions.
PPFAS Mutual Fund continues to hold the highest cash-to-AUM ratio among equity-oriented schemes at 21.12% (₹29,405 Cr), underscoring a notably defensive stance and ample dry powder for selective deployment amid market volatility. Quant MF also maintains an elevated cash position at 12.61% (₹10,690 Cr), followed by Motilal Oswal MF with 10.21% (₹12,018 Cr), reflecting a cautious yet opportunistic investment approach.
Motilal Oswal Flexi Cap Fund tops the chart with the highest cash-to-AUM ratio at 28.61% (₹3,965 Cr), highlighting a highly defensive and opportunity-ready stance. Parag Parikh Flexi Cap Fund follows with a substantial 21.49% cash holding (₹28,649 Cr), reinforcing its conservative positioning and flexibility for future deployment. SBI Contra Fund also maintains elevated liquidity at 18.04% (₹9,013 Cr), reflecting a cautious yet opportunistic investment approach.
Contra Funds lead the liquidity spectrum with the highest cash-to-AUM ratio of 13.48% (₹10,214 Cr), reflecting a distinctly cautious yet opportunistic positioning. Flexi Cap Funds follow with a sizable 11.02% cash holding (₹60,923 Cr), underlining their flexibility to dynamically allocate across market segments as valuations and opportunities evolve.
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