June 23, 2022
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MFs accumulate total cash at Rs 60k cr
The amount of cash that mutual funds MFs hold has been on the rise.
MFs held the equivalent of 1.9 per cent of equity assets in cash in June 2021 which has since risen to 2.99 per cent as of May 2022. The total amount in cash is up from Rs 31,598 crore to Rs 59,886 crore during the same period.
There were at least five fund houses that held more than 5 per cent cash as of May-end. There were four such fund houses in May 2021-none of them had a double-digit cash holding, unlike now, with the top cash holding at 10.8 per cent for PPFAS Asset Management. Rajeev Thakkar, chief investment officer, and director at PPFAS Asset Management said that he does not expect cash levels to significantly increase above current levels.
The rise could also be a function of inflows. The mutual funds could simply be getting more cash than they would have deployed, rather than actively seeking to sell portfolio stocks to ride out recent market volatility.
MFs were net buyers by an average of Rs 14,992 crore in the financial year 2021-22. They were net buyers by Rs 22,371 crore in April, the first month of the latest financial year, shows regulatory data.
They received Rs 12,286 crore in May through systematic investment plans (SIPs) which make automatic periodic monthly investments.
This is higher than the Rs 11,863.09 crore seen in April, according to data from the industry body, the Association of Mutual Funds in India (Amfi). The number of such SIP accounts was at an all-time high of 54.8 million in May, showed AMFI data.
Unit-holders invested a total of Rs 18,529.43 crore in equity funds in May. This includes both SIP investments as well as other lump-sum contributions. Retail investors held around Rs 18.49 trillion in equity assets as of May.
The inflows have come despite a challenging time for the markets with a correction of nearly 20 per cent from its all-time highs in October.
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