Equity Mutual Funds' Cash Pile Grows As Investments Slowdown

Cash holdings within actively managed equity mutual funds have steadily risen, even amid lower inflows, as fund managers adopt a cautious investment approach in uncertain markets.

In April 2025, data compiled by NDTV Profit, shows that the cash reserves across over 500 such schemes grew to 5.73% of their total assets under management, amounting to Rs 1.75 lakh crore.

Cash held by these schemes has grown despite a backdrop of slowing net inflows into active equity schemes, relative to their total AUM, while investments into equities made by fund managers also fell to a one-year low.

This ratio reached a one-year low of 0.79% as investors pivot towards safer options like hybrid funds, while passive schemes also experience increased inflows.

Exchange-traded funds gained popularity, as they offer investors the advantage of precise entry and exit pricing.

This proves beneficial for timing investments to capitalize on market dips, particularly as equities face heightened volatility from global uncertainties and domestic developments.

Even as investor moved away from actively managed equity schemes, overall investments into equities made by the entire mutual fund space also saw a dip in March and April.

During these two months, combined net investments into equities totaled Rs 31,521 crore—a notable decrease from the Rs 47,550 crore invested in February alone.