Cash levels at MFs remain below one-year average level of 4.3% in December

Cash levels at mutual funds remained below one-year average level of 4.3 per cent in December. At Rs 271 billion, cash holdings were at 3.9 per cent of equity assets under management (AUM) of Rs 6,867 billion (open-ended equity schemes), data provided by Value Research showed.

The benchmark Sensex gained 28 per cent in 2017, while the broader markets rallied even more. On an absolute basis, however, cash holdings rose by Rs 14 billion in December over the previous month. These could be on the back of high net inflows in equity schemes during the month.

An analysis of cash levels at mutual funds don’t point to any nervousness or caution among fund managers even after last year’s stellar rally. The markets have extended gains this month by another six per cent.

The gains have come on the back of foreign investor inflows of close to $2 billion. It will be interesting to see if the recent gains have triggered any profit-taking by domestic money managers.