Cash Holding Trends in Equity MFs - May 2025
Financial Report
Equity Mutual Funds Turn Buoyant in May Amid High Cash Reserves: India’s equity mutual funds adopted a more optimistic stance in May 2025, ramping up market purchases despite a decline in net inflows. However, overall cash holdings remained elevated at ₹2.17 Lakh Crore—only slightly lower than ₹2.3 Lakh Crore in April—indicating continued caution and selective deployment.
Top AMCs Cash Holding Ratio Falls to 5.75%: The average cash holding ratio among the top 20 AMCs declined to 5.75% in May, down from 6.53% in April, reflecting a measured increase in equity allocations.
Cash-Heavy Mutual Funds: PPFAS Tops with 21.62%, SBI Holds ₹34,747 Cr
PPFAS MF leads the pack with the highest cash holding ratio at 21.62%, reflecting its conservative and flexible investment approach..
Motilal Oswal MF and Quant MF follow with 13.56% and 10.35% of AUM in cash, respectively, highlighting strong liquidity positioning.
SBI MF holds the largest pile at ₹34,747 Cr, followed by HDFC MF ₹27,133 Cr and ICICI Pru MF ₹26,752 Cr, showing significant dry powder among large AMCs.
Motilal Oswal Flexi Cap Fund holds the highest cash ratio among equity schemes at 28.35%, reflecting a strong liquidity stance amid prevailing market uncertainties. Close behind, Motilal Oswal Midcap Fund and Parag Parikh Flexi Cap Fund maintain elevated cash levels of 25.19% and 21.82%, respectively, positioning themselves among the most liquidity-heavy active equity strategies. SBI Contra Fund also stands out with a notable 22.07% in cash, while SBI Small Cap Fund holds 18.25%, both indicating a cautious and flexible approach in response to potential market volatility.
Contra Funds top the chart with 16.08% of AUM in cash, indicating a highly cautious or opportunistic approach amid market uncertainty, Flexi Cap Funds follow with a substantial 10.26%, indicating a deliberate strategy focused on liquidity and tactical allocation flexibility. Focused Funds, with 8.76% in cash, appear to support their concentrated stock-picking approach with a healthy liquidity buffer. Small and Mid Cap Funds also show prudence, holding 7.98% and 7.15% respectively, likely to weather short-term volatility or await better entry points.
Mutual Funds Step Up Market Buying Despite Slowing Inflows: Mutual funds purchased equities worth ₹56,302 crore in May 2025, reflecting a strong buying appetite. However, inflows into equity mutual fund schemes dropped to ₹19,013 crore—the lowest in several months—marking the fourth consecutive month of decline. This divergence highlights that AMCs are deploying existing cash reserves despite subdued investor inflows.
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