Strategists are urging investors to allocate more of their portfolios to cash during these volatile times, as rising interest rates mean it is delivering higher yields. “Cash is king” last month, Bank of America said in a September 1 note, when most asset classes – such as stocks, bonds and even commodities – suffered losses. “Cash (currently yielding 2.9%) was the only major asset class up (+0.2%), potentially outpacing [consumer price index] Again,” wrote Bofa strategists. For John Petrides, portfolio manager at Tocqueville Asset Management, “for the first time in a long time, cash offers a competitive option versus bonds and stocks if you are worried about the near term. “The goal is to preserve capital, because of this ‘very, very risky’ market environment,” added Eric Lonergan, macro fund manager at M&G Investments. His company sold stocks and bonds short. go to cash. Read more Professional analysts on Wall Street issue warnings on stocks. Here’s what they say to buy instead These better stocks can be a safe bet right now – and analysts appreciate them. In fact, the performance of mutual funds backed by Goldman Sachs said earlier this year that mutual funds had allocated 1.5% of their portfolios to cash – the lowest level in at least 30 years, Goldman said in an August 25 note. In June, however, the fund manager ers grew its cash allocation faster than any six-month period since the second half of 2008 and currently have 2.4% of their portfolio allocated to cash, or $208 billion. “Mutual funds have increased their cash allocation this year at the fastest rate since the Global Financial Crisis, helping them perform better,” Goldman analysts wrote. However, not all cash is created equal, according to Morgan Stanley. Among the highest-yielding options is the 6-month Treasury bill, which is yielding around 3.1% – the highest since 2007, according to Morgan Stanley. They “provide 157bp [basis points] more than the S&P 500 dividend, 21bp compared to the US 10-year Treasury and just 60bp below the US Composite Bonds index,” said strategist Andrew Sheets on Aug. For USD investors, cash has ceased to be an important drag on current portfolio yields. “Petrides of Tocqueville Asset Management told CNBC that, ‘if you’re cautious about the next 6-9 months in terms of the economy and/or financial markets… then a 6-month T-bill. [that] an interest rate close to 3% – in a tax-deferred account – seems like a reasonable asset allocation. “Morgan Stanley says holding the US dollar looks ‘relatively attractive’, given that it offers current yields as well as high liquidity.”[It] provides a better 12-month total return than our strategic forecast implies for US stocks, US Treasuries and also US [investment grade] or [high yield] Bank analysts said credit (with significantly less volatility). In how long? If you are interested in making money, how long should you implement the “cash is king” strategy? more than 20% in some of his portfolios, as he waits for tech valuations to fall back before contributing back into the field. While Petrides said that cash “works until the market changes”. The yield curve would then slope down, economic growth would begin again, and investors could once again feel comfortable owning long-term assets such as growth stocks or stocks. bonds have longer maturities,” he added. – CNBC’s Sarah Min contributed to this report.