With central banks signaling rate cuts and inflation easing, Capital Group suggests investors it might be time to rethink defensive allocations and exit cash.

Haran Karunakaran, Investment Director at the American financial services company, notes, “the benefits of maintaining such high allocations to cash may be diminishing.” High-quality fixed income may offer better returns as bond prices rise in a falling rate environment. “In other words, this is an environment where it may make sense to shift back toward a more traditional defensive bond allocation,” Karunakaran adds.

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