It is important to understand what percentage of the assets a fund holds in cash and what its cash management strategy is, as well as what the historical cash holdings are.
Funds that move into cash aggressively may be able to protect you in crash. However, keep in mind, as the market rallies, they will lag the market as they move back from cash to equities. On the other hand, funds that are always fully invested will do well in a rally, but give you severely negative returns in a crash.
Selecting a mutual fund is both art and science and should be done very thoughtfully. Study the fund house carefully or work with a qualified investment advisor who understands mutual fund selection. More than 40 fund houses and thousands of funds make us spoilt for choice. So, choose wisely.
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