Small and mid-cap equity MFs raise cash-holdings

Average cash-holding in September about 8%

Equity mutual funds investing in small and mid-cap stocks have increased their cash exposure by over 4% since the beginning of this year. 

 

According to data compiled by mutual fund tracker, Morningstar, the average cash-holding of these funds touched 7.39% in the September quarter. The average cash-holding in these funds stood at 3.73% in December 2012. The highest rise in cash exposure was seen in the March 2013 quarter, with the cash-holding almost doubling to 6.39%. 

 

Fund analysts attributed the rise in cash-holding to volatile equity markets and the poor performance of the mid and small-cap equities. Since the beginning of the year, the BSE Mid-Cap index was down about 22% while the BSE Small-Cap index was down 26%.

 

All Escort equity mutual fund schemes had a cash exposure of more than 15% as on September 2013. In most cases, equity funds with lower asset bases have relatively high cash exposures, with IDFC Premier Equity fund being a rare exception, which held 15% exposure in CBLO at the end of September 2013, a report by Morningstar noted.