Equity MF Cash Holdings Plunge to 19-Month Low as Funds Aggressively Deploy Into Domestic Stocks

Equity MF Cash Holdings Plunge to 19-Month Low as Funds Aggressively Deploy Into Domestic Stocks​

Cash holdings across equity mutual fund (MF) schemes hit a significant low in June, indicating that asset managers are actively deploying funds into domestic equities amid continued market firmness. This trend was supported by global easing of war tensions and the stabilization of crude oil prices.

Equity Mutual Fund Cash Levels Reach 19-Month Trough​

Cash holdings across the equity MF sector stood at ₹1.84 lakh crore in June, marking a trough since November 2024 when the figure was recorded at ₹1.80 lakh crore. This represents a 2.3 percent decline from the ₹1.88 lakh crore reported in May.

As per ACE Equities data, the cash holdings translated to approximately 4 percent of total equity assets under management (AUM). This is down from the 4.9 percent ratio recorded at the end of December 2025. The reduction suggests that fund houses are prioritizing capital deployment over high cash reserves.

Market Stability Drives Fund Deployment Trend​

Indian equity markets demonstrated resilience in June. The benchmark Sensex and Nifty advanced by around 2 percent each, signaling a positive environment for investments. The broader market segment also showed strength, with the BSE 150 MidCap index rising 1 percent and the BSE 250 SmallCap index gaining an impressive 4 percent.

The overall trend across fund houses was weighted towards capital deployment. Of the 54 mutual fund houses tracked, 31 reduced their cash holdings during June, while 23 increased them, indicating a mixed but predominantly reducing stance on idle cash reserves.

Key Fund Houses Reduce Cash Reserves​

Several major fund houses led the reduction in cash holdings during the month. SBI Mutual Fund saw its cash balance fall to ₹22,084 crore in June, down from ₹25,914 crore reported the previous month.

PPFAS Mutual Fund and Motilal Oswal Mutual Fund also reduced their cash reserves. PPFAS Mutual Fund's cash holdings dropped to ₹24,108 crore from ₹26,105 crore. Motilal Oswal Mutual Fund lowered its balance to ₹2,532 crore from ₹4,435 crore.

Other fund houses that reduced their cash holdings included Bandhan Mutual Fund, HDFC Mutual Fund, Axis Mutual Fund, Kotak Mutual Fund, and DSP Mutual Fund among the reporting entities.

Strategic Cash Increases Among Select Funds​

While a majority of funds reduced their cash levels, some strategic increases were noted among other key players. Quant Mutual Fund increased its cash balance to ₹14,008 crore in June, up from ₹12,183 crore in May.

Nippon India Mutual Fund and ICICI Prudential Mutual Fund also recorded higher cash holdings. Nippon India Mutual Fund raised its cash to ₹7,195 crore from ₹5,387 crore a month earlier. Similarly, ICICI Prudential Mutual Fund increased its cache to ₹20,042 crore, up from ₹18,540 crore.