Every mutual fund scheme comes with a mandate to invest in certain type of securities, but it is allowed to have a small part of its portfolio in cash to meet redemptions or make use of any ‘buy’ opportunities. Usually, equity funds hold cash 1-5% of a fund’s corpus in cash, though some funds can hold as high as 7-10%. Some funds have higher levels because their mandate allows them to, if—as per their analysis—good stocks are not available at desirable valuations. Whether or not a fund ought to hold cash is a subjective call.
Here’s a list of funds with the highest cash levels.