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Low-risk alternatives to sitting on cash

Some defensive (but not risk-free) fund options
Low-risk alternatives to sitting on cash
  • With inflation eroding the real value of cash, investors could consider some lower-risk fund options
  • Absolute return and bond funds can be suitable options

Cash is king, except when it isn’t. Seen as the only truly safe option for investors looking to park their money to one side, cash can be expected to wither in value for as long as inflation remains at elevated levels. That poses a dilemma for investors who dislike risk but still wish to shelter their wealth.

Some investors are calling time on cash for now. While the figures could be skewed by the decisions of a few big institutional names, Morningstar notes that European investors dragged a net $43.3bn (£33bn) out of so-called money market funds in February, making it the fourth worst month for the asset class since the research provider starting collecting European fund flow data in 2007. Seeing wave after wave of alarming inflation reports, UK investors may well be tempted to do something similar.

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