Mutual Funds Trim Cash in June as Equities Rally
Growing appetite for stocks sees cash buffers pared, says MOFSL Fund Folio
Cash Ratios Dip Across Major Players
India’s top mutual funds reduced their cash holdings in June 2025 amid a rebound in equity inflows and rising market levels, signalling growing confidence and active deployment into stocks, according to Motilal Oswal’s latest Fund Folio.
- Aggregate cash ratio: Fell to 5.8% of equity assets in June from 6.8% in May, as managers recycled idle funds into markets.
- Net equity inflows: Jumped to ₹24,600 cr in June from ₹20,100 cr in May, while SIP contributions hit a record ₹27,270 cr.
SBI MF Leads Absolute Cuts
SBI Mutual Fund, India’s largest by equity AUM, made the largest cash reduction in absolute terms, lowering its buffer by ₹250 cr to ₹1,007 cr.
- Cash allocation: Slipped from 8.6% to 8.1%, reflecting its bullish stance on the market’s near-term momentum.
- Sector tilt: Fund managers added to NBFCs, retail, and consumer durables, while trimming private banks and utilities exposure.
HDFC, Axis, Nippon Also Pare Buffers
Other large players followed suit:
- HDFC Mutual Fund: Cash down to 7.2% from 7.6%.
- Axis Mutual Fund: Reduced to 4.9% from 5.4%.
- Nippon India MF: Cut to 2.6% from 3.1%.
- Motilal Oswal MF: Slashed from 16.4% to 10.1%, redeploying funds into telecom and consumer durables.
Value-Oriented PPFAS Remains Most Cautious
PPFAS Mutual Fund, known for a conservative, value-driven approach, retained the highest cash ratio at 19.6%, though down from 21.6% in May.
- Bandhan MF: Bucked the trend, raising cash to 7.7% from 6.6%.
- Invesco MF: Increased slightly to 2.4% from 2.0%.
Market Context: Nifty and AUM Growth
The cash drawdown coincided with a 3.1% rise in the Nifty, which closed June at 25,517, and a 4.3% month-on-month increase in mutual fund equity AUMs to ₹36.6 lakh cr.
- Equity markets: Gained on hopes of sustained corporate earnings and a benign interest rate outlook.
- Fund flows: Point to a broadening of the rally beyond large-caps into mid- and small-cap segments.
