Why cash is not necessarily trash in your portfolio

MULTI-ASSET

Michael Stanes, investment director at Heartwood Investment Management, argues fund managers should be willing to break an unwritten rule.

It is an unwritten rule among many fund managers that they are paid to invest client money, not hold it in cash. Indeed, Roger Lowenstein wrote in the Wall Street Journal: ‘Do you know why fund managers rush to pick up the cheque at lunch? They are desperate to get the green stuff out of their wallets; they are in dread of holding cash.’ For many investors, this axiom is even more poignant in the current climate of record low interest rates. It stands to reason, then, that some fund managers might adopt the philosophy that ‘cash is trash’. But if a rule ever needed to be broken, th...