ETFs can be a good option for an investor who has a large temporary cash position.
Such a cash position may tilt an investor's portfolio away from its targeted allocation to equities or fixed income. Over extended periods, that position can result in performance shortfalls relative to benchmarks or financial goals. Why? Historically, equity and fixed income markets have had more periods of positive returns than periods of negative returns. The longer the time period, the stronger this performance bias. Investing a temporary cash position in ETFs reduces the likelihood of such performance shortfalls.
Equities and/or fixed income investments could underperform cash during the transition period.
Trading costs may offset some of the potential advantages.