Investors are increasingly keeping their money in cash lately, thanks to market uncertainty and high yields offered by money market and bank accounts.

Four months into a bull market, nearly 20% of U.S. investors’ portfolios right now are made up of cash, according to new data from State Street Global Advisors (SSGA).

The reason is partly due to investors’ worries about a coming recession, and partly because cash investments are more attractive now than they’ve been in more than a decade.

“For the first time since the Global Financial Crisis, cash yields are providing a reasonable return relative to risk assets,” the SSGA researchers wrote. “[I]n the face of economic uncertainty, cash yields have been gaining in appeal.”

Cash is king again

In its latest Investor Sentiment report, SSGA collated data from tens of thousands of portfolios which, the researchers claimed, “is estimated to capture just over 10% of outstanding fixed income securities globally.”

In other words, the data gives us a pretty good idea of where investors are putting their money.

Among the most notable findings was that investors have more than 19% of their portfolios in cash. That figure just recently ticked up over the historical average for the only time (save the height of the COVID-19 pandemic) since 2010.

Chart of how cash allocation tops long-term averages

Part of the reason has to do with attractive yields on cash accounts, with companies now regularly offering 4% and up on basic savings accounts.

The other reason is less cheery. “Our data indicates that overall investor asset allocation to cash generally increases heading into a recession,” SSGA’s analysts wrote, “as ultra-short investments provide shelter during these storms.”

One notable demonstration of this behavior occurred during the peak of the COVID-19 pandemic, when stocks shot down and cash shot up.

Today, with reputable names like Goldman Sachs predicting a reasonable chance of recession in the next 12 months, it seems more people are moving to this more defensive asset class.

How Long Will Cash Stay King?

Thanks to high interest rates, the yield on a 10-year treasury bond is currently over 4% – higher than it’s been since the 2008 recession.

You can see, then, why banks need to offer high APYs to attract potential customers: people can invest in bonds today for an all but guaranteed positive return.

As SSGA pointed out, interest rates – and the bond yields that correlate with them – are likely to remain high for a long time.

“The Fed also may not be done hiking, with current FOMC projection expecting another 50 bps of hikes before remaining at a 5.625% terminal level for up to three quarters. The highly anticipated cutting cycle is also expected to be gradual, with only 100 bps of rate cuts projected through the end of 2024,” they wrote.

As long as interest rates and bonds remain so attractive, so, too, will returns on cash accounts. As long as inflation doesn’t eat away at those returns, it’ll be good news for investors.