Is your mutual fund holding too much cash?
Usually, equity funds hold cash 1-5% of a fund’s corpus in cash, though some funds can hold as high as 7-10%
Here’s a list of funds with the highest cash levels
Every mutual fund scheme comes with a mandate to invest in certain type of securities. And at all times, as well. But every mutual fund scheme is allowed a tiny part of its portfolio in cash. This is allowed in order to meet redemptions or any ‘buy’ opportunities that the fund may come across on any day. Usually, equity funds hold cash between 1% and 5% of a fund’s corpus, though some funds can hold as high as 7-10% of their corpus in cash. Some funds prefer to hold larger portions of their portfolios in cash because their mandate allows them to hold high cash levels if—as per their analysis—good stocks are not available at desirable valuations. Few others like dynamic equity funds also hold higher cash if they feel equity markets are overheated. Read more here.