In a recent article in Barrons “What To Do With Excess Cash” Abby Schultz points out there is an interesting trend among high net worth investors to hold a high percentage of their investable assets in cash or cash equivalents:
“According to Federal Reserve figures, retail investors had about 18% of their assets in money market funds and in U.S. bank deposits, considered cash alternatives, at the height of the financial crisis in 2009. But today, they still have a high percentage in cash—around 14%.
Citi Private Bank’s clients, who have at least US$25 million in investable wealth, had about 25% of their wealth in cash in 2009, but they still have 22% in cash today, says Bailin, global head of investments at the bank.”
This mindset is hard for the wealth management industry to understand when they have so many products to replace that cash, including relatively high yielding money market funds.… Read this article