The amount of cash holdings in US money markets increased to $4.7 trillion over the past eight weeks, according to Markets Insider. The growth in cash holdings aligns with when governments around the world started implementing strict social distancing measures that led to the loss of jobs.
Growth in money market holdings is telling given that they are the least risky investments available. Typically, money market funds aim to ensure that investors break even rather than make a larger return.
However, UBS has directed their clients towards more lucrative investment alternatives during the pandemic. More specifically, UBS suggests investing in lower-quality stocks that have higher yields.
Additionally, they suggest investing in companies that are more valuable as a result of changes brought on by the coronavirus pandemic. Such sectors that have been positively impacted include e-commerce, automation, robotics and genetic therapies.
UBS also suggests borrowing more money while the cost to borrow is low in order to increase needed liquidity to cover costs during the pandemic.
"Having sufficient liquidity to meet near-term spending needs is important for investors, and helps avoid the need to sell potentially high return assets at the wrong time," UBS said.