\n<\/p>\n
Cautious investors piling into cash may want to consider other options.<\/p>\n
According to SPDR Exchange Traded Funds’ Matthew Bartolini, active management can also provide them with stability and income while creating more opportunities for upside.<\/p>\n
“Active fixed income has been really a consistent engine of support within the active [ETF] construct \u2014 not only from flows but also returns,” the firm’s managing director and research head told CNBC’s “ETF Edge<\/a>” this week.<\/p>\n Bartolini contends that not only do they give investors more flexibility, the strategies also provide consistent performance and improved tax efficiencies.<\/p>\n He also believes the forward-looking returns are looking better than they have in the past.<\/p>\n “But with higher returns comes higher volatility,” added Bartolini, who sees big benefits from active management. “The thing we keep going back to with investors [is] about creating portfolios that can generate income returns while maximizing the amount of risk they are taking to get those because yields are high.”<\/p>\n Bartolini warns cash carries its own set of risks.<\/p>\n “On the cash portion of the market, that income is not going to be as stable as it once was because of reinvestment risk,” he said.<\/p>\n<\/div>\n Dan Egan, vice president of behavioral finance and investing at robo-advisor Betterment, said it’s “very, very difficult” to pull investors out of cash.<\/p>\n “It’s very hard to get people to think about bonds when you can get that risk-free,” he said. “Don’t forget that FDIC insurance plays a very big role in people’s sense of safety.”<\/p>\n Betterment’s website as of Friday shows its variable high-yield cash account pays 4.75% APY. It’s also giving new customers a promotional rate of 5.50% for three months.<\/p>\n‘Very hard to get people to think about bonds’<\/h2>\n