Winning Bizness Desk

Mumbai. At present something is going on in the market which was already expected. Amidst the market uncertainty, mutual fund houses are avoiding fresh investments in equity schemes in anticipation of fall in share prices and due to this, the average cash holding of mutual funds in equity schemes rose to 6.2% at the end of February. Parag Parikh Financial Advisory Services Mutual Fund has the highest cash holding of 14% among equity schemes of top 20 fund companies in the country. The company has said that at present our cash holding is at the highest level. We don't force ourselves to buy stocks whenever new money comes in. The market is volatile and we are waiting for the stock price to reach our target level. Whenever the opportunity arises, we will use cash.

What do the statistics say?

Since September 2021, the collection of mutual funds through SIP has remained above 10 thousand crores. In February 2023, this figure increased to 13686 crores. Investment of mutual funds in the equity market has remained above Rs 1.5 lakh crore for two consecutive years. Despite this record investment, mutual funds have a lot of cash with them. According to the Fund Folio Report by Motilal Oswal Investment Services, the average cash holding of equity schemes of mutual fund companies was 3.2%. It almost doubles to 6.2% in February 2023. Apart from Parag Parikh, cash holdings of three more leading fund houses Axis MF, PGIM India MF and SBI MF were also above 10% at the end of February.

Nifty has fallen almost 7% so far this year

The decision to maintain liquidity levels has proved to be correct amid continuous inflow of cash into mutual funds. The Nifty has fallen almost 7% so far this year. On the verge of correction, this benchmark index has come down by about 10% from its all-time high of December 1, 2022. Fund managers expect the market to remain moderately volatile for the next few months or to further decline and will get an opportunity to buy stocks at better valuations.