Cash vs. Returns: How Mutual Fund Cash Levels Impact Equity Performance

• Mutual funds often debate increasing cash holdings during market volatility for downside protection.
• Higher cash levels can lead to underperformance in a bull market, as seen in India's current environment.
• Flexicap category data shows top ten funds held 7% cash, while Kotak Flexicap Fund maintained 1-3%.
• Kotak Flexicap Fund, with lower cash, outperformed the category average over 1 year (10.42% vs 6.82%).
• Experts suggest minimal cash in equity portfolios allows greater participation in market gains despite short-term fluctuations.