Mutual funds reduce cash holdings in June as markets strengthen: MOFSL Fund Folio

SBI Mutual Fund, India’s largest by equity AUM, saw the biggest cut in absolute terms, reducing cash by Rs 250 crore to Rs 1,007 crore. Its cash allocation dropped to 8.1 percent from 8.6 percent.

India’s top mutual funds reduced their cash holdings in June 2025 amid a rebound in equity inflows and rising market levels, signalling growing confidence and active deployment into stocks, according to Motilal Oswal’s latest Fund Folio. Cash as a share of total equity assets fell to 5.8 percent from 6.8 percent the previous month. The shift came amidst increased net equity inflows of Rs 24,600 crore in June, up from Rs 20,100 crore in May, while systematic investment plan (SIP) contributions hit a record Rs 27,270 crore.

SBI Mutual Fund, India’s largest by equity AUM, saw cash allocation drop to 8.1 percent from 8.6 percent. HDFC Mutual Fund trimmed its holdings down to 7.2 percent from 7.6 percent. Axis Mutual Fund and Nippon India Mutual Fund also pared down cash to 4.9 percent and 2.6 percent, respectively. Motilal Oswal Mutual Fund also saw its cash as a percentage of equity assets fall from 16.4 percent to 10.1 percent. PPFAS Mutual Fund, known for its value approach, had the highest cash holdings for the month at 19.6 percent, though lower than 21.6 percent in May 2025.

Other mutual funds which saw a decrease in cash holdings were Sundaram Mutual Fund (5.5 percent from 6.6 percent), DSP Mutual Fund ( 7.8 percent to 6.4 percent) and Tata Mutual Fund ( 5.8 percent to 5.5 percent) while increase in holdings were seen in Bandhan Mutual Fund (6.6 percent to 7.7 percent) and Invesco Mutual Fund (2 percent to 2.4 percent)

The report notes that this cash reduction came alongside a 3.1 percent rise in the Nifty, which ended June at 25,517, and a 4.3 percent month-on-month increase in mutual fund equity AUMs to Rs 36.6 lakh crore. Fund managers increased allocation to sectors like NBFCs, retail, consumer durables, and telecom, while exposure to private banks, automobiles, technology, and utilities were lower.