Why we keep so much cash, and don't apologise for it

We get asked, politely, why we hold cash when markets are rising. The suggestion is that cash is a drag, a loss of nerve, money sitting idle.

We read it the other way round. Cash is the one asset that gets more useful precisely when everything else gets cheaper. It lets us act fast at the moment most investors cannot, because they are fully invested and frightened. We do not hold it because we have a view on next month. We hold it because we cannot know when the opportunity comes, only that it always does.

The cost of carrying cash is small and easy to see. A little forgone return while markets climb. The cost of not having it stays invisible until it is huge: the bargain you watched someone else take while you had nothing spare. We will pay the small, visible cost every time.

The views above are the firm's own and are provided for information only. They are not investment advice, nor an offer or solicitation to invest. Capital at risk; the value of investments can go down as well as up, and past performance is not a guide to future results.