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Cash May Be The Thing, But It's Not King

Fund managers say not to read too much into their increased cash stakes.

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Equity-mutual fund managers have devoted more of their portfolios to cash in recent months, but not all of them are keeping cash at the ready for a big year-end rally.

The average stock-mutual fund's cash stake increased to 6% of its portfolio in October from 5.3% in the previous month, according to the Investment Company Institute (ICI). Independent liquidity tracker TrimTabs.com estimates the average equity fund's cash holdings is even higher--about 6.5%.

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Dan Culloton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.