MFs' cash holding doubles in a month

It’s not just investors, even fund managers believe that ‘cash is king’. Equity and hybrid funds’ cash holdings hit Rs 9,729 crore, or 11.46 per cent of their average assets under management (AAUM) of Rs 84,908 crore, at the end of January. This is the highest in the last one year.
As per data compiled by Mumbai-based Networth Capital, the total cash level of mutual funds (debt and equity) rose by 110 per cent to Rs 42, 930 crore in January 2009 from Rs 20,415 crore in December 2008. And the cash holding, especially of equity funds, has been steadily rising.
Just a year ago, cash holding of equity mutual funds was a mere 3.72 per cent, or Rs 5,796 crore. However, the AAUM of equity and hybrid funds at the end of January 2007 was much higher at Rs 1.56 lakh crore.
Jayesh Shroff, fund manager, SBI Mutual Fund, said that institutional players were wary and did not want to be caught on the wrong foot as the entire world economy was going through a recession. “When there is so much uncertainty in the market, cash is the best option,” he said.
Reliance Mutual Fund tops the chart in cash level with Rs 6,150 crore. Its AAUM in equity and hybrid funds is Rs 18,511 crore. However, this is because one of its schemes, Reliance Power Diversified Fund, has the mandate to hold 100 per cent of its assets in cash. There are some other schemes as well that can hold up to 30 per cent in cash.
Other fund houses that have high cash levels in their equity and hybrid funds include UTI Mutual Fund (Rs 4,633 crore), SBI Mutual Fund (Rs 2,162 crore), Franklin Templeton Mutual Fund (Rs 868 crore) and HDFC Mutual Fund (Rs 764 crore).
“At present, mutual funds have tremendous potential to support the market in case of a big fall. In fact, while the US markets are back at their October lows, the domestic market has shown good resilience. Funds managers are displaying commendable maturity by not getting carried away,” said Deepak Sawhney, head (research), Networth Capital.
Fund managers are optimistic that things will improve soon.