Investor Cash Allocations

By Callum Thomas

When I look at charts like this, sayings such as “cash is trash” or “there is no alternative” come to mind.  The chart uses data from the AAII survey and ICI mutual fund statistics to give two views on US investor portfolio allocations to cash.  The bottom line is cash allocations are at rock bottom.  Interestingly though, the AAII surveyed allocation has rebounded from the low-point in January this year.  Question is, how many Fed rate hikes will it take until cash looks attractive again?  …but then again, interest income isn’t always all that matters, when the core job of cash in a portfolio is typically to do the heavy lifting as a defensive asset for capital preservation purposes.  So contrarians: take note.

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Gary

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