As the summer wanes, we’ve heard from a few clients who have a bit of cash sitting on the sidelines and are wondering what to do with it. This is a recurring question from clients which can cause a lot of angst, particularly after a stretch of strong market returns such as the one we’ve experienced this year. Through the end of August, our flagship balanced Global Income composite has returned 13.3% gross of fees (12.5% net of fees), relative to 12.3% for the S&P 500 and 16.7% for the NASDAQ. If you’ve held on to extra cash, awaiting the perfect opportunity to put it to work, you’ve missed out on this performance.
As the 20th century financier Bernard Baruch said, and we’ve previously written, now is always the hardest time to invest. One can always find a justification for sitting out of the market, whether it’s the tariff spat of 2025 (and ongoing), the continuing conflict in Iran, or any other event that inspires fear of market volatility. Though no one can tell what the market will do in the near term, investors who are sitting in cash are forgoing a 4.3% yield from dividends and interest in our Global Income strategy. Regardless of whether the strong performance of our portfolio continues through year-end and beyond, this income will likely continue to be there to fund your retirement needs or purchase more shares of stocks and bonds, augmenting long-term returns.
There are of course valid reasons to hold cash, whether it’s earmarked for a near-term large purchase, tuition need, or other major expense. However, even if you’re holding this dedicated cash in a high yield savings account (HYSA), you may not be maximizing its ability to generate income. Prevailing rates on leading HYSAs are around 3.0% to 3.4%, though you may find short-term promotional rates that boost the APY for a few months but which may require you to maintain minimum savings deposits or lock your savings up for a defined period. At Altrius, we offer low-fee cash management accounts in which we purchase short-term Treasuries for our clients. As of writing, 3-month Treasury rates sit at 3.92% and offer a tax advantage relative to HYSAs since the interest from Treasuries is exempt from state and local taxes. Your assets also remain liquid in a cash management account and can be moved into a personal checking account whenever you’d like within two days, while not being subject to FDIC insurance limits on bank deposits of $250,000 for an individual account and $500,000 for a joint account. Your assets with Altrius are custodied with Charles Schwab and belong to you, and Treasury bills are backed by the full faith and credit of the U.S. government.
If you are holding out for the right time to invest your cash that’s currently sitting on the sidelines, understand that a clear signal rarely presents itself. Waiting to time the market is often frivolous and you are forgoing income along the way. Even if you’re sitting in cash that’s earmarked for a particular goal, we’d love to discuss opening a cash management account for you to capitalize on attractive Treasury rates and advantageous tax treatment.
As always, we greatly appreciate your trust. Should you or a loved one have any questions regarding your investment strategy or to schedule an introductory meeting, please don’t hesitate to reach out.