Ridhwan Muzaki

18 Apr 2020

∙

Hi, I am wondering how will the 5% cash component in global portfolio allow the roboadvisor to take advantage of market conditions?

Hi, I am wondering how will the 5% cash component in global portfolio allow the roboadvisor to take advantage of market conditions? I cant wrap my head around this. Roboadvisors are algorithms managing our investment allocations, tweaking the portfolio every now and then to ensure it remains aligned to the indicated risk appetite. How will these algorithms take advantage of market situations to maximise returns? What will be one scenario of this?

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Frankie Rappaport

18 Apr 2020

There is no need of free cash in a brokerage account, since implied market timing is not a functioning strategy, even when I myself would be happy to have a lot of free cash for buying right now.

but on the longterm the more cash there is not invested, the lower your total portfolio perfornance.

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