By Kris Moreton, CFA, Senior Vice President, Fixed Income Client Portfolio Manager; Alice Flynn, Director, Short-Term Fixed Income Products
Low rates for the foreseeable future are a great reason to consider a more active approach to your cash position.
Even when investors try to be logical, it’s challenging to keep emotions at bay when markets are in free fall. And when faced with capital losses, many well-planned investment strategies can be quickly forgotten in the hope of preserving wealth. Investors sometimes opt to move to cash, which may provide a short-term sense of relief. But in the long run, this knee-jerk reaction can significantly erode their wealth.
Timing rarely works in investors’ favor
We recently saw an influx into cash in response to the COVID-19 pandemic. The Morningstar Money Market – Taxable category gained significant cash flows in April and May when market volatility surged. Investors who allocated to cash