According to a recent MLIV Pulse survey of 404 investors, two-thirds of them have opted to hold cash as their investment strategy this year. The investors believe that their cash portfolios will yield a net positive return rather than weighing down the returns of an investment portfolio.
The decision of the investors to hold cash is due to concerns about uncertain financial and economic conditions, bear market concerns, continued interest rate hikes by the Federal Reserve (Fed), and the prospect of a recession that may heavily impact investment portfolios as in 2022.
Morgan’s chief US equity strategist Stanley has also revealed to Bloomberg TV that the S&P500 could drop about 20% as corporate performance weakens.
Cash has become a safe haven for investors, especially when U.S. short-term bond yields are high enough to beat the classic 60/40 portfolio of stocks and bonds for the first time since 2001. Even high-yield savings accounts pay interest, which is close to hitting 4% right now.
The CEO of Verdence Capital Advisors, Chris Cortese, said, “We encourage investors to hold cash. You can earn good returns, while there will be great volatility in the market. And there is a huge chance that cash will yield an attractive level of return.”
Investors are cautious about the future, and they believe that holding cash is a safer investment option. The current market conditions are causing investors to rethink their investment strategies, and many are choosing cash as a safe and secure option.