Cash possession of actively managed stock -oriented investment funds fell to a lowest point of seven months of 5.5 percent in June, which indicated a shift of the cautious attitude that was seen earlier in the year.
The cash levels, which amounted to 4.6 percent in June 2024, had steadily risen to a peak of 6.8 percent in April 2025, because fund managers remained defensive in the midst of market uncertainty. In the past two months, however, many fund houses have re -used cash in shares.
In value conditions, the total cash possession fell over 517 Active Equity Mutual Fund schemes of £ 2.1-Lakh Crore in April to £ 1.86-Lakh Crore by June 2025.
ACEMF data show that 51 percent of these schemes lower the exposure to cash Between April and June, while 46 percent remained stable and the rest.
This shift came across the background of a broader market recovery. From its peak at the end of September 2024 to the beginning of March 2025, the Indian shares underwent a significant correction – Nifty 100 fell by 17 percent, while the Nifty Midcap 150 and Nifty Smallcap 250 fell by 21 percent and 26 percent respectively. The markets have since organized a robust comeback, with the Nifty 100, Nifty Midcap 150 and Nifty Smallcap 250 that yield returns of 14 percent, 21 percent and 25 percent from their low respectively.
Renewed optimism post-April, powered by cooling inflation, RBI interest rates and hope for revival in business income, encouraged the deployment of cash. Funds such as Motilal Oswal Flexi Cap (cash levels lowered from £ 3,433 crore to £ 1,378 crore), Axis Large Cap (£ 4,074 crore to £ 2.072 crore), and Parag Parikh Flexi Cap (£ 23.448 crore to £ 21.493. Volatility also opened tactical opportunities in sectors such as capital markets, electricity, transport and defense.
Mixed results
Cash serves as a pillow in falling markets and offers liquidity during corrections, but it is a double -edged sword. In volatile phases such as the current, cash are often missing a sharp V-shaped market recovery.
Between September 2024 and March 2025, mainly funds with higher cash – such as Parag Parikh Flexi Cap (20 percent, on average in the last year), Parag Parikh Elss Tax Saver (18 percent) and HDFC focust (13 percent) – helped to limit the disadvantage.
In the recovery phase from March to July 2025, low-cash funds usually performed better than. Motilal Oswal Large & Midcap (2 percent average cash in the past year), Invesco India Midcap (1 percent), DSP Small Cap (6.5 percent) and Sundaram Small Cap (6 percent) led the package.
During the full period (September 2024 to July 2025), some active and low-cash strategies did the Beter-Motilal Oswal Multi Cap in cash dynamically adjusted (between 3 and 21 percent), while Invesco India Midcap and Invesco India Large & Mid Cap lay layers of cash and strong returns.
Published on July 26, 2025
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