Mutual funds may invest heavily in equity markets

With a stable government likely to lead to a strong rally in the equity market, mutual fund houses are expected to invest in equities in a big way, thereby bringing down their cash holdings.“The equity market has bottomed out and mutual funds having cash will deploy it in the market in the next couple of months,” says Rajan Krishnan, chief executive officer of Baroda Pioneer Mutual Fund.R K Gupta, MD, Taurus Mutual Fund, says “There was a view that the market may see a correction in the runup to the poll results. That didn’t happen. Mutual funds will reduce their cash levels now,” said Gupta. Jayesh Shroff, head of equities at SBI Mutual Fund, however, said “Fund managers take the call on cash levels based on their investment and fund goals.”AP Kurian, chairman of the Association of Mutual Funds in India (Amfi), said “This poll result will clear the cloud of uncertainty and boost equity markets.”He, however, said how much cash a fund holds depends on a lot of factors, including investment goals.Some experts, however, have a different take. “Most fund houses missed the recent market rally. Now, they have no option other than holding on to their cash as it is not a bull market and it will require a meaningful correction for them to park cash in market,” said Dhirendra Kumar, CEO, Value Research.

Source: http://www.mydigitalfc.com/personal-finance/mutual-funds-may-invest-heavily-equity-markets-311