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The New Cash Hoarders: Smart Or Not-So-Smart?

Tuesday, June 28, 2011 - 9:08 AM
From SmartMoney.com
Sick of next-to-nothing bond yields and wary of stocks, some advisers and money managers are hiding out in cash -- a strategy they say cuts losses and builds up investing ammo for later when better opportunities arise. But will the defensive move backfire?

Cash is in vogue once again with investing pros. Nearly 20% of mutual fund managers are now holding more cash -- including money-market funds and other cash instruments -- than they usually do, according to a report this month by Bank of America Merrill Lynch Global Research. That's three times the percentage of managers who said they were overweight cash in May, and the highest level since June 2010, when investors were worried about the BP oil spill in the Gulf of Mexico. Cash currently accounts for 4.2% of assets of the average portfolio, up from 3.9% in May.

The shift to cash is not just limited to money managers....

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