Does sitting on cash actually pay off?

Summary: Cash in equity funds sounds reassuring, even clever. But does sitting on the sidelines actually improve outcomes, or just create the illusion of safety? A closer look at long-term data shows why cash calls matter far less than most investors assume. Equity funds don’t always stay fully invested. Some prefer to keep a little dry powder handy, while others believe every rupee should stay in the market. Cash, after all, can be both a shield and a missed opportunity. So, does holding more cash actually help funds deliver better returns later, or does it just drag performance? Before we test this theory against the data, let’s first understand why equity funds hold cash in the first place. Why do funds hold cash Waiting for better valuations: Sometimes, doing nothing is also a strategy. Fund managers keep cash handy when stocks look pricey, waiting for the market to offer a better deal. Cushion agai