Deep Dive: Investors and managers diverge on cash balances amid high interest rates

Market opportunities versus returns

Investors and fund managers are divided over how to manage their cash allocations, with record high levels of investment in money market funds standing in the face of low cash levels on asset managers' balance sheets.

Fund managers have been steadily decreasing the amount of cash they hold, with the latest Bank of America survey finding an average 4% cash holding in June, a decrease versus previous months. This is likely due to the potential performance other asset classes are showing at the moment, according to the bank. But Alastair Sewell, liquidity investment strategist at Aviva Investors, said investors do not share the same confidence. Assets within money market funds have been at an all-time high as investors seek to counter the erosion of inflation on their savings. This means that cash cur...