PMS schemes' cash levels fall in June as benchmark indices rebound

Fifty two, or 37%, of the 142 schemes under consideration had a cash holding of less than 5 per cent at the end of June, as against 43 in May

Fund managers of portfolio management services (PMS) schemes decreased cash levels in June as the benchmark indices rebounded and they scouted for beaten-down names, especially in the financial sector. 

Fifty two, or 37 per cent, of the 142 schemes under consideration had a cash holding of less than 5 per cent at the end of June, as against 43 in May. The number of schemes holding cash in excess of 10 per cent reduced to 51 in June, from 56 in the previous month. 

Fifty eight schemes reduced their cash holding in June, while 37 raised it. Of the former, 33 schemes showed a decline of 1-5 percentage points in June over the previous month;  another 18 schemes saw cash levels drop 5-10 percentage points. 

"Most portfolio managers sensed that the markets had reversed direction amid a partial recovery in select sectors. Attractive valuations in the mid- & small-cap space also resulted in cash deployment," said Daniel GM, founder, PMS Bazaar. He added the possibility of a second or a third wave of the Covid-19 pandemic or a delay in delivery of vaccines could make it harder for fund managers to decide on cash allocation. 

 

The Nifty50 rose 7.5 per cent in June, buoyed by the increased participation of individual investors.

Five strategies raised cash levels by more than 10 percentage points in June, seven by 5-10 percentage points, and 25 by 1-5 percentage points. Valcreate Life Sciences & Specialty Opportunities saw its cash levels rise from 6.8 per cent in May to 46.3 per cent in June. 

Other schemes that saw a sharp increase in cash levels, including Prabhudas Lilladher Fortune Strategy (13.5 per cent to 30.6 per cent) and Pelican-PE Fund (26.5 per cent to 40 per cent). 

High cash levels could indicate fund managers anticipate an adverse movement in the market going ahead. It may also indicate profit-booking by managers or a surge in inflows that is yet to be deployed.