Cash holdings of mutual funds! (Part I)

Cash holdings of all active equity funds amounted to approx. Rs.2.06 lakh crore at the end of July 2025. This is what you call dry powder. Mutual funds, however, cannot afford to hold onto cash for too long for two key reasons. First, investors who entrust their money to mutual funds expect active investment rather than idle cash holdings. Second, open-ended mutual funds need to deploy new inflows they continuously receive promptly.