mutual fund cash-to-assets ratio
Mutual fund cash-to-assets ratio
Mutual Fund Cash-to-Assets Ratio
In a mutual fund, the assets held in cash as a proportion of the fund's total assets. The cash-to-assets ratio is an important measure of a mutual fund's liquidity; a higher ratio indicates higher liquidity. Generally speaking, mutual funds keep large amount of cash on hand when they are about to make large purchases of securities. As such, a higher ratio is considered bullish while a low ratio is sometimes considered bearish because it may mean that the fund is choosing to hold its assets in low risk investment vehicles, such as bonds.
mutual fund cash-to-assets ratio
A ratio expressing the proportion of total assets held in cash by mutual funds. Because cash indicates liquidity and potential buying power on the part of mutual funds, a high ratio is generally considered bullish and a low ratio is considered bearish. See also sentiment index.