New Delhi, July 2 -- Indian equity mutual funds are sitting on more cash than usual. As of April 2025, aggregate cash levels touched 6% of total equity assets under management (AUM)-well above the historical median of 4%. This uptick has sparked debate: are fund managers trying to time the market, or simply playing it safe during a choppy phase?

Traditionally, equity mutual funds prefer to remain fully invested to capture market upside. However, when valuations appear stretched or volatility spikes, some managers increase cash as a tactical hedge. These so-called "cash calls" are meant to cushion downside and provide liquidity during redemptions. But are they actually effective?

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