An open-end mutual fund typically keeps a percentage, often around 5 percent, of its assets in cash

Question:

An open-end mutual fund typically keeps a percentage, often around 5 percent, of its assets in cash or liquid money market assets. How does this affect the fund's return in a year in which the market increases in value? How about during a bad year? Closed-end funds do not typically hold cash. What is it about the structure of open-end and closed-end funds that would influence this difference?