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Forward 3-Month USD Cash Rates Versus Bond Market Yields

Source: Refinitiv, Neuberger Berman. Data as of August 27, 2024.¹

As Cash Rates Decline, Investors May Want to Lock in Higher Yields

High short-term yields have encouraged investors to hold onto cash rather than allocating to investments that could deliver income over the long term. In a changing rate environment, investors might consider locking in higher yields for longer.

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Pulling Out in a Downturn May Mean Missing Much of the Recovery

In our view, high-quality equities may be a good option for investors who have been allocating to cash because they’re concerned about valuations or the economic cycle. As seen in the chart, stocks have historically outperformed cash over the long term.

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Rolling Average %, Months Stocks Outperform Cash

Source: Bloomberg and Ibbotson. Data from January 1, 1960 to December 31, 2023. Stocks are represented by the S&P 500 TR Index (backfilled by Ibbotson prior to Feb 1970).

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Rolling Average %, Months Commodities Outperform Cash

Rolling Average Annualized Return %, Commodities Earn Over Cash

Source: Bloomberg and Ibbotson. Data from January 1, 1960 to December 31, 2023. Commodities by the Bloomberg Commodity Index Total Return.

Investor Demand for Diversifiers Has Come Into Focus

As you move out of cash and add more risk to your portfolio, also consider alternative investments that can add diversification and could help reduce volatility. For example, over the last 50 years, Commodities have outperformed cash 60% of the time over any rolling 1-year period.

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