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Mutual Funds' Cash Holdings Drop

For the year 2009, fund managers kept lowering their cash holdings

Stock markets have been rising practically throughout the last nine months of 2009. While fund managers were caught off-guard by the rally’s start in early March, when they were under-invested, but by December-end they had ramped-up their investments to a new high, leaving them holding very little in terms of cash.

December saw equity funds’ cash holdings reach the lowest mark of the year, beating the earlier one registered in September, 2009. The total cash holdings of the mutual fund industry in December was 4.88 per cent, or Rs 8,113.79 crore - in September it was at 5.60 per cent. 

The highest cash holding period, in 2009, for the industry was in February at 18.43 per cent, worth Rs 16,480.60 crore, out of their total assets of Rs 89,434.94 crore. 

The only fund house that had a cash position above 10 per cent in December was Quantum at 12.04 per cent – the fund house has consistently maintained its cash position at, or around, 12 per cent, since October, 2009. However in November, there were seven fund houses which had cash positions above 10 per cent. 

In January, 2009, Sahara AMC topped the maximum cash holding list at 39.48 per cent, it later dropped it to 7.34 per cent in May and continued in that fashion till September. Thereafter, it increased its holding to 13.53 per cent and 12.35 per cent in October and November. In December it fell as low as 4.91 per cent. 

In December, in terms of absolute value, it was Reliance and ICICI Prudential fund houses that topped the table. While Reliance Mutual Fund had cash holdings to the tune of Rs 3,360.90 crore, ICICI Pru held Rs 1,188.09 crore in cash. However in percentage terms, both held the second and third positions in December with 9.87 per cent and 9.02 per cent cash holdings. 

Sundaram BNP Paribas had the lowest cash holding in December at 0.91 per cent, while in absolute terms, it was Baroda Pioneer which had the minimal cash holding at Rs 1.30 crore. 

If one talks about individual schemes and looks at percentage-wise break-up, Reliance Infrastructure, launched in June, and ICICI Prudential Dynamic, held the maximum 23.25 per cent and 21.70 per cent cash holdings in December 2009. Reliance Infrastructure, had a 57.41 per cent cash holding in July, but this dropped to 23.25 in December, 2009. Baring these two schemes, altogether 20 had a cash holding above 10 per cent in December. 

In absolute terms, three Reliance Mutual Fund schemes – Reliance Diversified Power Sector, Reliance Growth and Reliance Infrastructure - held the maximum at Rs 725.10 crore, Rs 707.27 crore and Rs 513.07 crore in cash holdings in December. 

Cash Holding of Equity Funds
Month  Cash Total (Cr)  Total Assets (Cr)*  cash (%)
Jan-09 15278.78 93175.91 16.40
Feb-09 16480.60 89434.94 18.43
Mar-09 12283.46 96514.52 12.73
Apr-09 15360.89 108522.51 14.15
May-09 13229.70 140040.90 9.45
Jun-09 12758.22 141111.53 9.04
Jul-09 14062.14 154827.48 9.08
Aug-09 12197.28 158595.18 7.69
Sep-09 9316.11 166503.47 5.60
Oct-09 12135.43 160094.66 7.58
Nov-09 10518.28 169003.44 6.22
Dec-09 8113.79 166112.57 4.88
*All open-end equity funds