New Delhi, Sept. 9 -- A rise in a mutual fund's cash allocation can easily be mistaken for a warning that the fund manager expects the stock market to fall. But experts say investors should not treat the cash figure as a direct market call. Cash may build up for several operational reasons, including fresh inflows awaiting deployment, money required for redemptions, dividends or interest, or funds being temporarily parked before an investment decision.

"The biggest misconception investors have about high cash levels in mutual funds is that a high cash number is a market call," said Vaibhav Porwal, co-founder, Dezerv. Investors often read a rise in cash as the manager turning bearish, even though a significant part of what is reported as ...