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Fund Industry's Cash Holding Drops

Fund houses have moved towards being fully invested in markets by reducing the amount of cash they are holding

For just the second time this year, the cash holding component of the mutual fund industry has reached a low point, indicating that fund managers are gung-ho about the equity markets and have pushed as much of their money into the markets as they could.

The total cash holding for the month of November was 6.42 per cent. This, when compared to the total cash holdings in October, was a decrease of 1.1 per cent - a cash holding position of 7.52 per cent of total assets was logged in October. The lowest figure in 2009 was recorded in September at 5.97 per cent when fund houses were holding onto Rs 9,871.33 crore.

In November, 2008, with markets reeling under the global financial crisis when investment opportunities dried up, fund houses had a total cash holding as high as Rs 13,378.99 crore, or 15.07 per cent of assets. It was, however, the month of February, 2009 when holdings in equities reached 18.38 per cent, which was the highest this year.

In February this year, ten fund houses had cash holdings above 20 per cent - Escorts, Reliance, Sahara, Taurus, JP Morgan, UTI, SBI, Sundaram BNP Paribas and Tata. Edelweiss Mutual Fund was at the top with 55.35 per cent. Compared to that, altogether, seven fund houses had cashing holdings above ten per cent in November.

After the start of the bull run (March 9, 2009), overall mutual funds' cash holdings, except for March and April this year, have remained below 10 per cent till November. From that particular date, markets have been on a rallying spree and registered returns of 107.4 per cent till November this year.

Coming back to November this year, it was Canara Robeco MF which topped the table in percentage terms, as its cash holding was at 13.33 per cent. However, it must be said that this sum was lesser than in October, when it reached 19.03 per cent.

 

Industry's Equity Cash Holding
Month    Cash (Rs Cr)    Total Assets (Rs Cr)    Cash (%)
Nov-09   10203.68   158998.02   6.42
Oct-09   11744.74   156107.66   7.52
Sep-09   9871.33   165243.94   5.97
Aug-09   11823.40   155407.00   7.61
Jul-09   13667.99   151806.05   9.00
Jun-09   12279.89   138165.63   8.89
May-09   12848.04   137171.02   9.37
Apr-09   14950.48   106771.16   14.00
Mar-09   13377.55   95001.14   14.08
Feb-09   16178.46   88031.83   18.38
Jan-09   14974.64   91698.88   16.33
Dec-08   13648.26   96041.14   14.21
Nov-08   13378.99   88766.41   15.07
 

 

But in absolute terms, it was Reliance MF (the biggest fund house as per assets), which came to the top of table. Its equity assets stood at Rs 33,940. 28, (as on November, 2009), while the cash holding component amounted to Rs 3,855.16 crore.

Another big fund house, HDFC, has decreased its cash holdings in November to 3.67 per cent from 4.11 per cent seen in October, thus decreasing its cash holding by 0.44 per cent. The fund house remains a noteworthy mention as it is least likely to hold cash. If one looks at the last one year figures, this fund house's cash holdings have never gone up to the 10 per cent mark and even in the depths of the global meltdown, in November, 2009, it stood at 3.40 per cent.

Shinsei MF, the new fund house, has brought down its cash holdings from 27.21 per cent in October to 7.54 per cent in November.

 

AMC-Wise Cash Holdings
     Cash (Rs Cr)    Total Assets (Rs Cr)    Cash Nov-09(%)    Cash Oct-09 (%)    Diff (%)
Canara Robeco MF   106.36   797.91   13.33   19.03   -5.70
IDFC MF   404.13   3089.49   13.08   10.14   2.94
Quantum MF   6.01   48.06   12.50   12.81   -0.32
Sahara MF   7.82   63.28   12.35   13.53   -1.17
Taurus MF   32.49   284.39   11.42   3.65   7.78
Reliance MF   3855.16   33940.28   11.36   13.96   -2.60
ICICI Prudential MF   1198.03   11759.00   10.19   7.45   2.74
Edelweiss MF   3.72   43.73   8.51   17.23   -8.72
Shinsei MF   1.61   21.36   7.54   27.21   -19.67
Birla Sun Life MF   516.33   8518.14   6.06   6.14   -0.08
Baroda Pioneer MF   3.72   65.27   5.69   4.31   1.38
DBS Chola MF   10.08   183.42   5.49   6.86   -1.37
Principal MF   114.34   2098.82   5.45   4.85   0.59
Religare MF   18.29   345.47   5.29   7.83   -2.53
ING Mutual Fund   28.63   551.85   5.19   5.59   -0.41
Franklin Templeton MF   635.61   12810.46   4.96   5.89   -0.93
UTI Mutual Fund   699.77   14810.38   4.72   6.57   -1.84
DSP BlackRock MF   570.27   12196.31   4.68   6.46   -1.79
SBI Mutual Fund   629.57   14176.97   4.44   5.35   -0.90
AIG Global Inv Grp MF   41.64   942.01   4.42   8.44   -4.02
Mirae Asset MF   8.38   210.54   3.98   3.62   0.36
JM Financial MF   57.47   1475.10   3.90   2.53   1.37
HSBC Mutual Fund   121.46   3257.08   3.73   6.08   -2.35
HDFC Mutual Fund   622.52   16946.08   3.67   4.11   -0.44
Tata Mutual Fund   168.32   5043.50   3.34   4.77   -1.44
Deutsche Mutual Fund   15.35   468.14   3.28   6.68   -3.40
Kotak Mahindra MF   89.45   3052.19   2.93   6.99   -4.06
Bharti AXA MF   3.49   128.02   2.72   4.03   -1.31
JPMorgan MF   26.48   1002.37   2.64   2.78   -0.14
LIC Mutual Fund   11.08   478.86   2.31   2.88   -0.57
Sundaram BNP Paribas   158.28   6989.03   2.26   9.63   -7.37
Fortis Mutual Fund   8.21   416.50   1.97   2.79   -0.82
Morgan Stanley MF   28.08   2231.26   1.26   1.96   -0.70
Benchmark MF   1.54   552.75   0.28   0.99   -0.71
Total    10203.68    158998.02    6.42    7.52    -1.11