UK fund managers hold an average of £705m in excess cash that they are not optimising returns on, according to recent research from FX and cash solutions provider MillTech.
The firm’s 2026 UK cash management report surveyed some 125 senior finance decision-makers at UK fund management houses and found that despite firms formally reviewing their excess cash holdings around 49 times a year, 81% believe they are missing out on potential income by not optimising excess cash.
That said, most respondents said they expected to increase their allocations in the near future.
Some 94% of respondents expected to use money market funds more over the next two years, with two in five expecting a significant rise. All respondents said trade tensions or geopolitical volatility had led them to move more assets towards balance sheets
Neil Gallacher, co-head of cash management solutions at MillTech, added: “Cash has traditionally sat in the shadow of portfolio assets for fund managers, while the growth of private markets has made cash flows lumpier and less predictable.
“Despite this, fund managers are showing a clear desire to put their cash to work amid ongoing inflation, interest rates and geopolitical disruption.”
The report also found that operational barriers prevented the finance teams from putting money to work, with managers citing difficulty comparing available rates, operational complexity and limited time and resources.
Some 96% of fund managers said onboarding complexity discouraged them from adding new cash management providers because of technology integration challenges and compliance and due diligence processes. Nine in 10 said they would be more likely to add new cash investment partners if onboarding was simpler.
Matt Shapcott, co-head of cash management solutions at MillTech, said: “The operational burden fund managers face means that the work to compare rates, add providers and manage allocations across multiple relationships only becomes more significant as assets under management grow.
“This friction makes it harder to act when better opportunities are available.”
See also: Fulcrum, Jupiter and Robeco funds among new additions to Bestinvest’s ‘Best Funds List’
