Cash has strong appeal during volatile times

Jun 23rd 2016

Brexit is the latest cause of volatility for investors. gave a voice to Giles Hutson’s perspective on the effect on cash:

At Insignis, we see Brexit as the latest, albeit extreme example of a broader theme of volatility in the capital markets in recent years. With the increased volatility the Referendum has occasioned, we see cash positions increasing significantly as both individuals and institutions not only switch out of more volatile asset classes but also accumulate cash based on delayed spending or investment plans. The two key motivations for this behaviour are capital preservation and the diversification of counterparty risk.

The issue is then what to do with these cash positions on both a short and long term basis. Cash should be seen as an actively managed asset class and that with significant improvements to payments technology and with new entrants to the banking market coming thick and fast, the benefits of looking at cash more actively have never been greater.

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