New Delhi, July 6 -- A mutual fund primarily invests in stocks, bonds, or commodities, but not every rupee in its portfolio is always deployed in these assets. The fund may maintain a small allocation to "cash and cash equivalents", a line item that often raises questions among investors.

Does a higher cash balance mean the fund manager is bearish? Is it a sign of caution? The answer is more nuanced. Here's what experts have to say on this.

Nitin Agrawal, CEO, Mutual Funds by InCred Money, explains, "Cash and cash equivalents refer to the portion of assets parked in treasury bills, overnight funds, tri-party repos (TREPS), and other highly liquid, short-duration instruments, assets that can be converted to actual cash at short notice wi...