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Are Fund Managers Holding More Cash ?

August 9, 2007

Our Mutual Fund Analyst researched some top mutual funds and has observed that the cash levels in portfolio have increased compared a quarter ago.

Reliance Growth fund and Reliance Equity Fund both managed by Sr. Fund Manager Sunil Singhania [On your Left] is holding is holding 9.81% and 15.11% of portfolio in Cash / Call Money. Reliance Vision fund is having 9.42% in Cash / Money Market instruments. Franklin India Flexicap fund once again managed by Sr. Fund Manager K N Siva Subramainan is also holding 9.42% of folio in Cash / Call Money. All these funds are large funds with portfilio value ranging between Rs 4,000 to Rs 3,200 crore.

Our star fund manager Prashant Jain of HDFC Equity and Top-200 has taken a different bet. Holds very low cash in HDFC Equity fund – 2.9% while in HDFC Top-200 fund it is at 9.1%. The portfolio of HDFC Equity Fund is mostly Large Cap liquid stocks and hence we guess he feels it un-necessary to hold cash.

What is common in all the above funds is, where Managers take significant exposure to Midcap stocks, they prefer to hold around 10% cash in their funds. However, if volatility continues then they are expected to shift to Large Cap otherwise they are under severe pressure of quarterly performance with their peers.

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