A Survey Disclosed This Year That 'Cash Is No Longer Trash' — What Prompted This Outcome

Earlier in March, in a survey, two-thirds of the respondents reportedly said that cash in their portfolios would be a net positive this year, reinforcing the “cash is no longer trash” theory that has been gaining prominence.

What Happened: The verdict came from professionals who had taken part in the MLIV Pulse survey, according to a Bloomberg report.

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The allure of cash stemmed from looming fears of a recession in the backdrop of persistent rate hikes from the Federal Reserve as inflation still remains sticky. 

According to the survey, only 17% of survey respondents said it was highly possible an average active large-cap U.S. equity fund would outperform a passive fund tracking the S&P 500, after fees, this year.

Morgan Stanley's chief U.S. equity strategist Michael Wilson had told Bloomberg TV in February that the S&P 500 Index could decline close to 20% due to weak corporate earnings. Coupled with that, an expected rise in rates and unstable investor sentiment may also not bode well for Treasuries and bonds.

Leo Kelly, chief executive officer at Verdence Capital Advisors, had told Bloomberg then that they were "encouraging people that it's okay to hold cash, that it's not just a lead weight on your ankle weighing you down."

"You can get a nice yield and there will be a lot of volatility in the markets and lots of chances to put that cash to work at attractive levels," Kelly had said then.

This story was originally published on March 5, 2023.

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