MFs raise cash levels ahead of Q3 results

Cash levels with equity mutual funds (MFs) have seen a sizeable rise ahead of the December quarter results announcements. Cash as a percentage of equity assets under management (AUM) in December increased nearly 100 basis points (bps) or Rs 4,200 crore over the previous month. This is one of the highest such month-on-month increases.
 
In December, equity MFs received net inflow of Rs 10,000 crore, while their net equity investments in the cash segment stood at Rs 9,200 crore. Markets have declined since November, due to concerns over the note ban and withdrawal by foreign investors after Donald Trump’s victory in the US elections. MFs remained aggressive buyers in the market during this period.
 
Experts say raising of cash levels wasn’t a sector-wide trend. “MFs continue to remain bullish on market prospects. They have been consistent with a ‘buy-on-dips’ strategy. However, some might have opted to wait for the note ban impact and Trump’s policies,” said a manager.
 
Axis MF, IDFC MF  and ICICI Prudential MF have the highest cash levels.

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