Mutual funds sit on Rs 27,400 crore cash pile

Funds gear up for year-end redemption pressure.

The domestic mutual fund industry is sitting on a pile of cash. In February 2004, cash and cash-equivalent assets of mutual funds increased to Rs 27,456 crore from Rs 22,118 crore in January.

Cash in hand includes cash lying in banks and that invested in the overnight call money market, repos and other current assets.

Data compiled by mutualfundsindia.com show that cash accounted for 20.44 per cent of mutual funds' total assets of Rs 134,803 crore at the end of February 2004. In January, it accounted for 16.41 per cent of their total assets of Rs 134,326 crore.

Industry sources cited two reasons for this pile-up. First, funds are gearing up for the redemption pressure expected in March, the end of the financial year. And second, having exited the bond market, they do not have many investment options open immediately.

Prudential ICICI was sitting on a cash pile of Rs 4,647 crore in February, compared with Rs 3,342 crore in January.

Its cash assets accounted for 30.4 per cent of its total assets of Rs 15,284 crore in February, against 22.25 per cent of its total assets of Rs 15,024 crore in January.

Prudential ICICI's Liquid Fund played safe, with cash in hand increasing Rs 958 crore between January and February.

UTI Mutual Fund's cash pile grew Rs 593 crore to Rs 3,672 crore in February, accounting for 18.92 per cent of its total assets under management.

Templeton India Mutual Fund is sitting on Rs 4,155 crore in cash, up Rs 841 crore from January. The cash build-up was strongest in its weekly dividend plan, growth fund and floating rate fund.

Cash with Birla Mutual Fund increased Rs 626 crore to Rs 1,872 crore, with most of it coming from its income and cash plus plans.

ING Vysya Mutual Fund's cash pile increased Rs 262 crore to Rs 491 crore and that of HDFC Mutual Funds Rs 243 crore to Rs 3,669 crore.