A ratio of a
mutual fund's cash and cash equivalents to the
assets in which it is currently
invested. That is, if a mutual fund has a large amount of cash that it has not invested in
securities, the ratio is higher, while, if all or nearly all of its
liquidity is invested, the ratio is lower. A high ratio is considered a
bearish indicator because it means that the mutual fund is having difficulty finding investments with solid
returns, and is therefore keeping larger
cash reserves. Mutual funds publish liquidity ratios each month.