In the case of an open - end fund, there has to be a portion of the fund in cash to handle transaction costs of running the fund as there are management fees to come from running the fund in addition to dividends from the stocks that have to be carefully re-invested and other matters that make this quite easy to note. (money.stackexchange.com)
Every mutual fund has something called an expense ratio, which is a percentage of your money that's taken out of your investment every single year to pay the costs of running the fund. (momanddadmoney.com)
This money goes to pay for the cost of running the fund. (abcsofinvesting.net)