Portfolio Cash Investment Strategies on the Increase

Jun 14th 2018

Recent research by Julius Baer shows that a more defensive investment position is recommended. This is a major step to ensure not only a diversified portfolio but to mitigate potential risks in the current investment environment.

The suggested cash percentage in a portfolio has increased to 12% in a high-risk portfolio, 7% for an income-based portfolio and 8% for a balanced portfolio.

We see this as an indication that there is an expectation of higher interest rates as inflationary pressure builds. Due to Brexit and weak economic numbers, the outlook for UK equities is negative. When outlook is negative in both bonds and equities, this drives a high cash percentage to position for capital preservation.

Paul Richards, Chairman, Insignis Cash Solutions comments: “Uncertainty in the market leads to a more conservative and liquid portfolio stance. While the US markets are looking strong, and historically the UK have always followed suit, Brexit adds a level of uncertainty that is bucking this trend. Therefore, higher cash allocation strategies are going to become more common in the short term.”