Amid a strong market rally and renewed foreign inflows, active equity mutual funds continued to maintain elevated cash buffers in October, reflecting a cautious stance by fund managers despite rising equity indices.

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ICICI Prudential MF Leads in Cash Reserves Market Context and Fund Managers’ Strategy Key Highlights

According to data from ACE Equities, aggregate cash holdings in active equity schemes rose slightly to 4.11% in October from 4.10% in September. In absolute terms, cash reserves increased to ₹2.09 lakh crore, up from ₹1.99 lakh crore a month earlier.

ICICI Prudential MF Leads in Cash Reserves

Among the major fund houses, ICICI Prudential Mutual Fund held the highest cash reserves, exceeding ₹32,800 crore, indicating a conservative approach amid strong market performance.

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Market Context and Fund Managers’ Strategy

Indian equities advanced in October, supported by foreign portfolio investors (FPIs) who purchased over $1.6 billion worth of shares during the month. This rally was fueled by optimism around a potential trade agreement with the US and robust Q2 earnings.

Despite these gains, fund managers remained cautious due to stretched valuations across several market segments compared with historical averages. Analysts noted that while cash positions help manage volatility, maintaining high reserves can limit participation in rising markets.

Most fund houses are choosing to align cash deployment with earnings growth and valuation comfort, rather than taking aggressive calls in the current market environment.