Intro:
PMS funds holding 50% cash isn’t normal. But in 2025, several ultra-cautious portfolio managers continue to stay underinvested—even as Nifty approaches all-time highs. What’s driving this extreme positioning? Let’s break it down.
What’s Triggering the Caution?
- Valuation concerns: Nifty 50’s PE ratio crossed 23x—historically a warning sign.
- Geopolitical risks: Middle East conflict and China–Taiwan tensions keep managers on edge.
- Rate cycle uncertainty: RBI has paused rate cuts despite global dovishness.
- Weak earnings in some sectors: IT, pharma, and real estate haven’t yet shown full recovery.
- Fear of a sharp correction: Managers burnt in 2022–23 downturns are playing it safe.
Real PMS Moves: Who’s Holding Cash?
Some well-known PMS players have kept 25–50% in cash despite rising indices:
| PMS Fund Name | Cash Allocation | Reason Cited |
|---|---|---|
| Value-based PMS | 50% | Valuations stretched, no margin of safety |
| Macro-Thematic PMS | 30% | Awaiting Fed pivot and rate clarity |
| Bearish-Focused PMS | 55% | Predicting major correction ahead |
What Does This Mean for Retail Investors?
- Don’t copy blindly: Just because PMS is in cash doesn’t mean you exit.
- Your goals ≠ PMS goals: They may be benchmarking, you’re building long-term wealth.
- Volatility ≠ Risk: Use SIPs to average in—don’t try to time the top.
What a SEBI-Registered Analyst Says
“Extreme cash allocation isn’t always tactical. Sometimes it’s indecision disguised as strategy. Retail investors should stay diversified, not directionally tilted based on fear.”
Should You Be Worried?
Not really—unless your PMS is consistently underperforming. Here’s what to check:
✅ Track PMS returns vs. benchmark
✅ Ask for rationale behind cash calls
✅ Don’t fall for media hype—most headlines exaggerate risk