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Thirty two of the 139 PMS schemes held 10 per cent or more in cash at the end of September. Sixty schemes had cash holdings of 5 per cent or more.
Eklavya Capital’s Long Term Value scheme held 71 per cent in cash, the most among the schemes under consideration, data from PMS AIF World showed. Equirus’ Core Equity (34.9 per cent) and First Global’s Indian Multi-Asset Allocation PMS (25.2 per cent) were the other two schemes holding the most cash.
The hawkish commentary by US Federal Reserve, rise in bond yields, surge in crude prices and heightened geopolitical tensions have unnerved markets.
Holding cash
“For us, cash is an outcome of the kind of opportunities available in the market today. We recently sold a few positions which were expensive and which we had been holding for five-six years. We are not able to find reasonably priced, bottom-up stock ideas at this point in time, which indicates some amount of froth in the market. However, we have no compulsion to invest and are comfortable sitting on cash,” said the fund manager, whose PMS is among the top-10 list of schemes holding the most cash.
To be sure, PMS schemes typically hold concentrated portfolios, and it is not unusual for them to hold such high cash in their portfolios. The ongoing market volatility and run-up in small- and mid-cap stocks may have also prompted a high cash exposure.
“Some of the funds would have booked profits when the markets were elevated. Small- and mid-cap funds would have seen inflows and may be waiting for better opportunities to deploy the money. Some of these stocks have come off 15-20 per cent from their highs, which spells good news for funds sitting on cash,” said Sameer Kamdar, founder & CEO, Smart Money.
“PMS schemes may hold high cash at times as they run concentrated portfolios and an absolute return strategy, which could deviate from the benchmark. In the recent past, small- and mid-caps have done extremely well, and there is a fair probability that fund managers have booked profits in this space,” added Vikaas Sachdeva, Managing Director, Sundaram Alternates.
The NSE Midcap 100 is down 4.5 per cent in the last one month, but the NSE Smallcap 100 has slid only marginally.
About a third of PMS schemes have beaten the benchmark Nifty 50 returns of 2 per cent in September. Top performers for the month include Estee Advisors’ Long Alpha (8.2 per cent), followed by Green Lantern Capital’s Growth Fund (7.8 per cent) and ABANS’ Smart Beta Portfolio (7.2 per cent).
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