Mutual Fund Cash Holdings Hit 16-Month Low In March As Funds Deploy Capital During Market Correction

Mutual fund cash holdings declined to a 16-month low in March 2026 as fund houses utilised available liquidity to invest in equities during a broad market selloff, according to ACE MF data.

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Cash balances among the mutual fund companies declined to ₹1.86 lakh crore in March compared to ₹2.10 lakh crore in February, a drop of ₹24,319 crore or 12%. It is the lowest cash balance since December 2024. As a percentage of AUM, cash balances dropped to 4.73% in March from 4.86% in February and 5.76% in March 2024.

Funds Deploy Cash Amid Market Decline

A decrease in cash was recorded at a time when the markets were correcting. Benchmark indices Sensex and Nifty declined 11.5% each in March, while broader indices such as the BSE MidCap 150 and BSE SmallCap 250 fell around 10%, based on publicly available market data.

In the process, nearly 60% of the mutual fund organisations utilised their cash in buying stocks, while others kept their cash positions unchanged or higher than before.

Fund House-Wise Cash Movements

Several large fund houses reported a decline in cash holdings. SBI Mutual Fund reduced its equity cash holdings to ₹27,464 crore in March from ₹34,704 crore in February. ICICI Prudential Mutual Fund cut cash levels to ₹17,290 crore from ₹23,876 crore during the same period.

Motilal Oswal Mutual Fund lowered its cash holdings to ₹3,124 crore from ₹6,722 crore, while Quant Mutual Fund reduced its cash to ₹10,000 crore from ₹13,000 crore. HDFC Mutual Fund also decreased its cash holdings to ₹21,352 crore compared to ₹23,579 crore in February.

Aditya Birla Mutual Fund and Tata Mutual Fund reported cash holdings of ₹2,485 crore and ₹3,699 crore, respectively, down from ₹3,777 crore and ₹4,869 crore in the previous month.

Other fund houses including Invesco, Bank of India Mutual Fund, PPFAS, and DSP Mutual Fund also reported lower cash levels in March.

Some Funds Increase Cash Levels

A few fund houses increased their cash holdings during the month. Nippon India Mutual Fund raised its cash holdings to ₹7,811 crore from ₹6,158 crore in February. Axis Mutual Fund increased cash to ₹16,470 crore from ₹15,296 crore, while Edelweiss Mutual Fund reported a rise to ₹1,505 crore from ₹1,147 crore.

Baroda BNP Paribas Mutual Fund, Canara Robeco Mutual Fund, Abakkus Mutual Fund, and LIC Mutual Fund also reported an increase in cash holdings during the period.

The decline in overall cash levels reflects deployment of funds during the March correction, even as cash as a share of AUM remains above levels seen a year ago.