Equity Mutual Fund Cash Holdings Decrease to 5.2% in May 2026; PPFAS Cash Allocation Remains at 17.7%

In May, the aggregate cash levels of equity mutual funds (MFs) decreased to 5.2%, continuing a trend of reduced cash holdings from previous months, as per the Motilal Oswal Fund Folio report.  

Among prominent fund houses, Parag Parikh Financial Advisory Services (PPFAS) maintained the highest cash allocation at 17.7%. 

Decline in Equity MF Cash Holdings 

During the month of May 2026, Equity Mutual Funds collectively reduced their cash holdings to 5.2%, following declines from 5.5% in April 2026 and 5.7% in March 2026.  

As per the report, this reduction highlights a strategic deployment of cash amid fluctuating market conditions. Concurrently, the Nifty50 index recorded a 1.9% decrease after a previous 7.5% rally in April 2026.  

Amid these movements, the Nifty Midcap 100 and Nifty Smallcap 100 indices marked gains of 3.2% and 0.7%, respectively. 

PPFAS Leads in Cash Allocation 

Standing out among the top 21 fund houses, PPFAS retained a significant cash allocation of 17.7% in May 2026. This marks a decrease from its holdings of 18.7% in April 2026 and 21.8% in March 2026.  

Other fund managers have similarly adjusted their cash positions, with SBI Mutual Fund recording a sharp decline from 7.4% in April 2026 to 6.2% in May 2026 and Axis Mutual Fund reducing from 7.8% to 6.9% over the same period. 

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Major Cash Position Adjustments by Fund Houses 

Nippon India Mutual Fund decreased its cash holdings from 2.2% in April 2026 to 1.6% in May 2026. Similarly, Tata Mutual Fund lowered its cash position to 4.7% from 5.7%.  

Edelweiss Mutual Fund and UTI Mutual Fund also reduced their cash levels to 3.1% and 3.3%, respectively. Notably, DSP Mutual Fund maintained its cash allocation at 7.6%, consistent with the previous month. 

Impact of Reduced Net Inflows 

In line with these cash reductions, net inflows into equity schemes hit a 12-month low of ₹23,800 crore in May 2026, down from ₹43,100 crore in April 2026.  

Despite these challenges, the month-on-month equity assets under management still grew by 1% to reach ₹39.5 lakh crore. 

Conclusion 

May 2026 saw equity Mutual Fund cash holdings decrease to 5.2%, with PPFAS retaining the highest cash allocation at 17.7%. This reduction coincided with lower net inflows of ₹23,800 crore and reallocation across funds. 

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Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.