Cash as a Percentage of Mutual Fund Portfolios (Since 2000)

Source: Investment Company Institute

For the second month in a row, cash sitting in mutual fund portfolios fell, according to figures released Tuesday afternoon from the

Investment Company Institute

. Cash as a percentage of mutual fund holdings fell to 5.6% in January, down from the December figure of 5.8%. Just three months ago, cash as a percentage of mutual fund portfolios reached a three-year high of 6.5%.

With a strong stock market in January, it's no surprise that cash levels came down a bit during the month. There's little doubt that some of the cash deployed by mutual funds helped boost stock prices during January. February's difficult stock-market environment, however, may temper fund managers' enthusiam for deploying large amounts of cash into equities. Indeed, fund managers might be content to let

their cash earn 5% in

money market accounts instead.