Advisors are weighing several factors as they determine the appropriate cash allocation for client portfolios
With stocks close to all-time highs, some advisors are taking profits and keeping more cash to have 'dry powder' in the event of a selloff.. Get exclusive investment industry news and insights, the week’s top headlines, and what you and your clients need to know. For more from Globe Advisor , visit our
Advisors are now weighing several factors as they determine the appropriate cash allocation for client portfolios. When fully invested, her client accounts will still have 1 to 2 per cent cash, but they’ve gone as high as 40 per cent in extreme bear market scenarios. She notes her firm has actively been taking profits in recent weeks, moving to about 7 to 10 per cent in cash across client accounts.
“While investors may be well-served to take advantage of current interest rate yields for cash and cash equivalents, it’s essential to maintain a balanced approach across asset classes, including bonds and equities,” he says. However, tactical calls are made to increase the cash weighting when they see the potential for shorter-term weakness.
“You can only take advantage of market pullbacks if you have cash, and we want to be ready when markets could take a bit of a dip,” he says.
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