Mutual Funds’ Equity Buying Slips to Three-Year Low; Cash Holdings Edge Up: Mutual funds remained net buyers in equities in February, with investments of ₹11,422 Cr, reflecting cautious deployment. Notably, this was the lowest equity buying in nearly three years, and the weakest since July 2023. Meanwhile, cash holdings rose slightly to ₹2.10 lakh Cr from ₹2.06 lakh Cr in January, indicating a steady liquidity buffer. As a result, the cash-to-equity AUM ratio increased, signalling slower equity deployment despite steady inflows.
AMC Cash Levels Edge Up; Liquidity Buffers Stay Healthy: The average cash holding ratio across the top 20 AMCs rose marginally to 5.39% in February from 5.36% in January, reflecting a modest build-up in liquidity buffers amid evolving market conditions. The ratio remained above the 5% mark, suggesting that fund managers stayed cautious and retained some cash flexibility to navigate volatility and deploy capital as opportunities emerge.
PPFAS Mutual Fund holds the highest cash-to-AUM ratio at 21.19% (₹29,741 Cr), reflecting a distinctly defensive stance with ample flexibility for future deployment. Quant MF follows with a high 16.43% (₹13,006 Cr), while Axis MF (7.73%) and Bandhan MF (6.23%) also maintain relatively elevated cash allocations, indicating a cautious yet opportunity driven investment approach.
Flexi Cap Funds Lead in Cash Intensity: Parag Parikh Flexi Cap Fund holds the highest cash-to-AUM ratio at 21.64% (₹29,047 Cr), signalling a defensive yet opportunity-ready stance. HDFC Flexi Cap Fund follows with 9.60% (₹9,642 Cr) in cash, highlighting meaningful liquidity for tactical deployment as market conditions evolve.
Contra, Focused & Small Cap Schemes Maintain Strong Buffers:SBI Contra Fund retains elevated liquidity at 16.63% (₹8,168 Cr), reflecting a cautious yet opportunistic investment approach. Among focused strategies, SBI Focused Fund holds 16.82% (₹7,285 Cr) in cash to support its concentrated portfolio positioning. SBI Small Cap Fund keeps 13.99% (₹4,886 Cr) and HDFC Small Cap Fund holds 8.07% (₹3,020 Cr), reflecting prudent liquidity buffers to manage higher volatility in smaller companies.
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