Why do I need to hold cash in my portfolio?


Cash is held in your portfolio for two purposes.

In the first instance, your account will always hold 2% cash, regardless of portfolio allocation. This cash is kept to pay for fees associated with running your account.

Secondly, cash is strategically held for investment-related reasons. Typically, lower-risk portfolios will tend to hold more cash. Cash will also be held if there aren’t sufficient investment opportunities once accounting for potential risks and returns.

All things being equal the portfolio will hold more cash when opportunities are more scarce and less cash when opportunities are plentiful.



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