Nuveen warns investors: Cash-heavy portfolios may be a costly mistake

Investors holding cash and money-market funds may be making a mistake by not considering longer-dated bonds, according to Nuveen's Chief Investment Officer, Saira Malik. Historical data shows that the broader U.S. bond market typically outperforms short-term Treasuries at the end of Federal Reserve rate hiking cycles. The bond market has produced an average 5.5% three-month rolling return following the last rate hike, compared to 2.1% for short-term Treasuries. Malik suggests that overallocating to cash or short-term government debt could be a mistake and advises investors to start closing their duration underweights.