While many investors kept cash on the sidelines last year, that should change this year, according to Goldman Sachs. Ashish Shah, chief investment officer of public markets at Goldman Sachs says “A lot of investors last year were frozen because of the volatility and uncertainty. As that uncertainty narrows, it’s really important for investors to take action.” Shah believes the Fed is closer to the end of the rate-hike cycle than it is to the beginning and rising inflation has begun to slow. With that in mind, Goldman is suggesting that now is the time to add duration to a portfolio through fixed income. Shah says “Cash in the portfolio of investors is still incredibly high. What we’re advocating [is that investors should] come out of cash in the bank and go into the market and capture some of this yield.” He added that while bonds are generating income, they also can rally even further than they already have. However, selection matters more now than it used to. According to Shah, investment-grade credit and municipal bonds with longer durations could be effective in achieving portfolio goals. He also noted that lower-quality muni bonds also have room to generate attractive yields and they’re tax-exempt.

Finsum:Goldman Sachs CIO Ashish Shah believes that now is the time to put cash to work in investment grade credit and municipal bonds as the Fed is nearing the end of its tightening cycle and inflation is starting to slow.