SUBSCRIBE NEWSLETTER
  • Change Language
  • English
  • Hindi
  • Marathi
  • Gujarati
  • Punjabi
  • Tamil
  • Telugu
  • Bengali
  • MF News Cash and debt allocation in equity diversified funds increases by 130%

    Cash and debt allocation in equity diversified funds increases by 130%

    Equity fund managers have allocated Rs.54,170 crore or 11.13% of total equity AUM of diversified funds in debt instruments and cash as on October 2017.
    Padmaja Choudhury Dec 6, 2017

    Market rally has thrown a challenge for equity fund managers to deploy money. ICRA Online data shows that fund managers managing diversified equity funds have increased their exposure to debt instruments and cash.

    These fund managers have allocated Rs.54,170 crore or 11.13% of the total AUM of diversified funds in debt instruments and cash equivalent assets as on October 2017. Such exposure was only 6.86% of diversified equity funds AUM or Rs.23,336 crore as on October 2016. The MF industry has the total AUM of Rs.4.87 lakh crore in October 2017 in diversified funds as against Rs.3.40 lakh crore in October 2016, shows the data.

    These equity Diversified funds does not include ELSS, sector, index, global and arbitrage funds.

    Experts say that fund managers increase the cash levels in market rallies. S. Krishnakumar, CIO Equity, Sundaram MF says that cash allocation gives an opportunity to the fund managers to deploy funds as and when market corrects.

    Seconding Krishnakumar’s view, Ramnath Venkateswaran, Equity Fund Manager, LIC MF says, “Cash allocation has increased as a precautionary measure given the sharp run up in the market over the last one month. Also, they may be holding cash to add more stocks. In fact, we have also marginally increased our cash allocation,” says Ramnath.

    A few fund managers believe that fund managers should stay fully invested in equities irrespective of market conditions. “Most investors have a decent allocation to debt instruments before they invest in equities. Hence, we keep cash allocation to the minimum. There is also no signs of caution from the macroeconomic perspective. In my view, fund managers should allocate only up to 2% of our AUM in cash,” says Swati Kulkarni, Equity Fund Manager, UTI MF.

     

    Have a query or a doubt?
    Need a clarification or more information on an issue?
    Cafemutual welcomes all mutual fund and insurance related questions. So write in to us at newsdesk@cafemutual.com

    Click to clap
    Disclaimer: Cafemutual is an industry platform of mutual fund professionals. Our visitors are requested to maintain the decorum of the platform when expressing their thoughts and commenting on articles. Viewers are advised to refrain from making defamatory allegations against individuals. Those making abusive language or defamatory allegations will be blocked from accessing the web site.
    0 Comment
    Be the first to comment.
    Login or Sign up to post comments.
    More than 2,07,000 of your industry peers are staying on top of their game by receiving daily tips, ideas and articles on growth strategies. Join them and stay updated by subscribing to Cafemutual newsletters.

    Fill in the below details or write to newsdesk@cafemutual.com and subscribe to Cafemutual Newsletter now.