Mutual Funds Step Up Equity Buying; Cash Buffer Holds, Ratio Dips: Mutual funds remained strong net buyers of equities in January, stepping up deployment to ₹42,355 Cr as market corrections created fresh buying opportunities. Cash holdings stayed largely stable but edged down to ₹2.06 lakh Cr from ₹2.08 lakh Cr in December, indicating active deployment. As a result, the cash-to-equity AUM ratio declined—signalling higher equity participation, supported by record SIP contributions.
AMC Cash Levels Inch Lower; Industry Stays Firmly Invested: The average cash holding ratio across the top 20 AMCs eased to 3.78% in January, marginally lower than 3.83% in December, driven by higher equity deployment. With cash buffers still comfortably below the 5% mark, the trend reflects a risk-on stance, strong investor confidence and fund managers’ preference to remain largely invested amid choppy but resilient market conditions.
PPFAS Mutual Fund holds the highest cash-to-AUM ratio at 19.88% (₹27,773 Cr), reflecting a distinctly defensive stance with significant deployment flexibility. Quant MF follows with an elevated 16.75% (₹13,126 Cr), while Motilal Oswal MF (8.59%) and Axis MF (7.57%) also maintain relatively higher cash allocations, signalling a cautious yet opportunistic approach.
Flexi Cap Funds Lead in Cash Intensity: Motilal Oswal Flexi Cap Fund tops the list with the highest cash-to-AUM at 25.54% (₹3,366 Cr), signalling a strongly defensive yet opportunity-ready stance. Parag Parikh Flexi Cap Fund follows with a sizeable 20.17% cash holding (₹27,023 Cr), while HDFC Flexi Cap Fund also stays elevated at 17.88% (₹17,422 Cr)—highlighting meaningful dry powder for future deployment.
Contra & Flexi Cap Funds Dominate Cash Holdings: Contra Funds sit at the top of the liquidity stack with a 12.82% cash-to-AUM buffer (₹9,455 Cr), signalling a cautious yet opportunity-ready stance. Flexi Cap Funds follow with a meaningful 11.09% cash holding (₹60,735 Cr), reinforcing their ability to swiftly rotate across market segments as valuations and earnings visibility shift.
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