In this market, will it make sense to focus more on companies that are sitting on cash rather than being invested?

Frankly, holding cash is not a great idea because you need the fund to be fully invested at all times. You can hold cash yourself. Some cash is fine but I have seen some funds holding 15-20% in cash. That is absolutely a waste of opportunities and letting them go begging. Equity funds can hold cash between 1% and 5% of a fund’s corpus depending on the circumstances. You should still prefer a fund that uses sharp corrections in the market to churn the portfolio and reallocate than just sit on cash. It is not the job of a mutual fund to try and catch a bottom. It should focus on reallocation and right allocation.