The mutual fund industry reduced its cash holdings by ₹15,545 crore in March, as they deployed capital to tap opportunities arising from market volatility triggered by the West Asia crisis and a sharp rise in Brent crude prices.
On a yearly basis, the industry’s cash holdings as a percentage of equity assets under management (AUM) declined to 2.55% in March 2026, down from 3.57% in March 2025.
Among major fund houses, Quant Mutual Fund, SBI Mutual Fund, and ICICI Prudential Mutual Fund deployed the most cash during the month, investing ₹5,607 crore, ₹5,393 crore, and ₹4,023 crore, respectively.
Contrarian Deployment
However, some fund managers increased their cash positions. PPFAS Mutual Fund recorded the highest rise in cash holdings at ₹1,842 crore, followed by Axis Mutual Fund (₹1,603 crore) and Nippon India Mutual Fund (₹1,511 crore).
Shreyash Devalkar, Head – Equity at Axis Mutual Fund, said the increase in cash levels reflects a tactical adjustment to the current market environment. The fund house has reduced exposure to segments facing near-term earnings pressure or weaker outlook due to the West Asia conflict.
He added that higher use of derivatives as an investment tool has also contributed to elevated cash balances. The fund house is deploying cash selectively as opportunities emerge, particularly in quality stocks where valuations have become more reasonable after recent corrections and in segments less impacted by energy-related concerns.
Raj Mehta, Executive Vice President and Fund Manager at PPFAS Mutual Fund, said that following a time correction since September 2024 and the recent price correction due to the conflict, valuations have started to look more attractive. However, he cautioned that some pockets remain expensive due to lack of earnings growth.
He added that the fund house has been selectively deploying capital into stocks offering attractive valuations relative to historical averages and strong earnings growth potential over the next few years.
Tactical Buffers
Despite the deployment trend, five fund houses continue to hold over 10% cash (as a share of equity assets) as of March 2026. Samco Mutual Fund has the highest cash allocation at 48.27%, followed by Old Bridge Mutual Fund (19.21%), Capitalmind Mutual Fund (16.26%), Abakkus Mutual Fund (13.25%), and Trust Mutual Fund (12.67%).
Over FY26, mutual fund industry cash holdings declined by ₹31,689 crore. The largest reductions were seen in Motilal Oswal Mutual Fund (₹11,552 crore), ICICI Prudential Mutual Fund (₹6,419 crore), SBI Mutual Fund (₹5,696 crore), and PPFAS Mutual Fund (₹3,997 crore).
Meanwhile, Edelweiss Mutual Fund (₹947 crore), Kotak Mahindra Mutual Fund (₹540 crore), and Nippon India Mutual Fund (₹491 crore) recorded the highest increase in cash holdings compared to March 2025.
Trideep Bhattacharya, President & CIO – Equities at Edelweiss Mutual Fund, said the fund house follows a strategy of near-full equity deployment, typically maintaining cash levels below 5% in its portfolios.