Timing is everything- importance of cash in the markets

Yann Gindre
Posted by Yann Gindre
Posted on January 28, 2021 Leave a comment

A little bit of history:

In 2018: All equity markets & equity indexes MSCI were in negative territory due to poor growth, the FED and BOE's decision to increase rates and continue the flattening of yield curves, the implementation of Brexit and the US trade wars with China. Cash was key as an asset class to any portfolio strategy.

In 2019: All equity markets & equity indexes MSCI were in positive territory driven by the belief that interest rates would remain low, with low returns on bonds. Cash would then be reduced in a portfolio strategy.

In 2020: A more complex picture with large swings due to a combination of COVID, Central banks aggressive monetary interventions, fiscal rescue packages and Brexit; Cash was key to any investment portfolios due to volatility and uncertainty.
UK, FTSE 100 and 250 and all shares being down 14%, 6.4% and 12.5% respectively, US, S&P plus 16% & the equity indexes MSCI were mostly in positive territory with low returns on bonds.

In 2021: Are investors already overly optimistic with:

  • The news of how lockdown impacts in Europe and the US
  • The difficulties associated with the COVID vaccine distribution
  • The rising range of Inflation, all be it slowly, around 2% both in the UK and the USA
  • Equity bubbles with global equity are historically expensive & overpriced while European equities might benefit from lower valuations
  • Bonds remaining unattractive due to low yields and spreads
What have we learnt?  
  • Equity bubbles happened particularly with the current market conditions and the corrections are brutal.
  • Swings in equity indexes, overpriced equity and missed priced stocks, are sure signs of corrections.
  • Market excesses or investor behaviour in stocks like Tesla, are signals not to be ignored.
  • Cash strategies for investors, are a key element of any proper investment portfolio both as an asset class or as a reserve to leverage market opportunities.

Going forward: 
  • Investors need to be careful and could consider uncorrelated investments to equity and bonds such as commodities, however, individual investors are not experienced in this asset class.
  • Bonds offer poor returns and are less of a safe haven as before.
  • Opportunities do exist, like UK equities but any correction in the US will impact other markets.
  • Any pullback or market corrections in the equity markets, provide strong opportunities but timing is everything; too early or too late and you lose.

As a result, ignoring cash strategies as asset classes or reserves by IFA’s would be a mistake during expected market corrections. 

So, why should you choose Akoni to help you with your client’s cash decisions?

1) Safe and secure with FSCS protection

All deposits are held with each bank providing protection of up to £85,000 per bank, or up to £1 million for Temporary High balances.

2)  Diversifying risk (spreading money across savings providers)

With the option to spread cash across several providers on the Akoni Cash Management Platform, you can diversify risk, and increase the chances of positive returns.

2) Increased returns & Better interest rates

In a climate of economic uncertainty, and with interest rates being cut across many providers, it’s not easy to find decent interest rates in a simple way. With Akoni, you can find competitive interest rates to suit your client’s specific needs. 

4) Quicker, and hassle-free - no form filling

Akoni Hub provides a hassle-free cash management experience - your clients can onboard and open an account online with no fuss. Clients will only need to complete one AML/KYC process, can switch between providers, and manage their account on the Akoni Cash Management Platform in just a few clicks.

5) White label Adviser portal and tools 

You have the flexibility to create a platform that works for you and your clients. Add your branding to showcase who you are through a sleek, professional cash management platform designed with you in mind.

The award-winning Akoni Cash Management Platform is already leading the way in the wealth management sector, and has partnerships with Barclays, Aldermore, Investec, Clydesdale, amongst others. The ability to white label the platform gives financial advisors flexibility to help their clients move cash depending on ever-changing macro and micro environmental factors.

Find out more about Akoni: Akoni is an award-winning UK cash platform, which provides a marketplace to financial advisors and wealth managers through a bespoke white-label offering, or off-the-shelf offering. Akoni uses innovative technology to personalise cash planning solutions for clients, and also provides a full API solution to banks and insurance clients.

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