Cash was supposed to be the low-risk, low-return asset.  And then everything changed. 

 

During the financial crisis that developed after the Lehman bankruptcy and the AIG rescue, cash became the high-risk, high-return asset.  Today’s cash is not your grandfather’s cash.  In this Viewpoint, Robert A. Jaeger and Cyrus Taraporevala of BNY Mellon Asset Management examine how this happened and what it tells us about the role of cash in investors’ investment portfolios. Without enough liquidity, they note, even investors with extremely long time horizons can end up as forced sellers during a panic. Cyrus and Bob conclude that cash and other forms of liquidity have to be built into the foundation of a portfolio.

 

For more information or a hard copy please contact, please contact David Zigas at 617 248-6202.

 

The preceding information is based upon the analysis of historical performance of various asset classes and assumptions with respect to future economic conditions. Past performance is not an indication of future results. This information is not intended to provide specific advice, recommendations or projected returns of any particular BNY Mellon Asset Management product.