The Hindu Business Line : Mutual funds’ cash holdings improve marginally

BL Research Bureau It is not only individual investors who were surprised by the speed at which the markets have corrected since January. Cash holdings and investment patterns disclosed by mutual funds in this period show that fund houses too were taken by surprise in this correction.

Equity fund managers, who invested substantial sums in the markets in January have not indulged in similar purchases in February.

By the end of January, over 230 equity funds that were in operation had a total cash position of close to Rs 5,500 crore, according to data from NAV India. By end February portfolio, the cash level stands at Rs 5,900 crore. Data from SEBI on mutual fund investments in the equity markets (cash segment) shows that mutual funds invested close to Rs 3,200 crore on January 21 and 22; both days witnessed markets undergoing a sharp fall.

In January, equity funds made total (net) investments of Rs 7,700 crore and held cash worth Rs 5,500 crore. By end-February with a net investment of Rs 57.5 crore over the month, their cash position stood at Rs 5,900 crore.

The numbers suggest that funds may have declared dividend payouts or faced outflows from their schemes during this period.

Funds which held significant cash positions were from DBS Chola and Sundaram BNP Paribas Mutual Fund. DBS Chola Advantage, despite a small asset base preferred to hold cash close to 24 per cent of the assets in cash in February. Out of the top twenty funds based on the proportion of cash in their portfolio, Sundaram BNP Paribas accounted for five.

Select Focus (18.3 per cent), Tax Saver, Capex held close to (10.5 per cent) and Leadership (9.4 per cent) and Rural India (8 per cent) were the Sundaram Funds with substantial cash holdings.

DBS Chola Contra and Standard Chartered Imperial Fund held close to 15 per cent of the assets in cash.

Among funds with a large asset base, Magnum Tax Gain, which has declared 110 per cent dividend in February held 10 per cent cash after distributing the dividend.

Other notable among the SBI stable were Magnum Multicap, Multiplier Plus and Magnum Midcap all had around 10 per cent of their portfolio in cash.

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