Much attention is devoted to the topic of where investors should place their dollars, but there’s rarely a discussion of what to do with cash balances. It’s the received wisdom that prudent investors should keep some dry powder–between 5 and 10 percent of investable assets–in their brokerage account. This cash allows one to take advantage of new investment opportunities as they arise and provides a bit of a cash cushion for performance.

But after 2008, investors have maintained higher cash balances in their accounts. The Great Recession hammered home the value of liquidity–a lesson that likely won’t be soon forgotten by any investor.

But with the average money market fund offering a yield of just 0.06 percent–yes, that’s six hundredths of 1 percent–keeping cash on hand will drag on a portfolio rather than cushion it against market swings. If investors don’t reinvest dividends immediately and those payouts get caught in their sweep account, the returns aren’t just abysmal, they’re almost nonexistent.

Furthermore, money markets will benefit little from rising interest rates–almost an inevitability by the end of the year–on account of new restrictions enacted after the collapse of the Reserve Primary Fund. As a result, money market funds don’t even provide safe haven in a rising interest rate environment.

Investors hold on to cash for different reasons. If you maintain a cash position to meet current needs and preservation of capital is your first and foremost concern, a money market fund is likely your best option.

A deposit money market account enjoys FDIC-insurance protection against loss. Holding shares of a money market fund provides some measure of protection in the form of strict regulations. These rules limit duration risk and mandate that the fund invest in only the highest-quality and most-liquid securities. This keeps the net asset values (NAV) of money market funds relatively stable. If you can’t stomach a loss, money markets are your best bet despite the low payouts.

But investors with a higher tolerance for risk, or those seeking to maintain a long-term cash balance, should consider hunting for higher yields.

PIMCO Enhanced Short Maturity Strategy (NYSE: MINT) is an actively managed, extremely short-duration bond fund designed to offer a superior yield to money markets–the fund current yields 0.8 percent. It also offers greater transparency than money market funds because it discloses its holdings on a daily basis and doesn’t use options, futures, swaps or any other type of leverage in the portfolio.

The fund has consistently maintained extremely high credit quality and the managers have successfully taken advantage of yield differentials offered by various corners of the fixed-income market. As a result, 59 percent of the fund’s assets are currently parked in corporate issues, 18 percent lie in government issues and 13 percent are allocated to mortgage-related securities. The remainder of the fund’s assets is spread across emerging markets and municipals, while 2 percent of investable assets are in cash equivalents.

The fund has clearly caught on with investors in this yield-starved environment; PIMCO Enhanced Short Maturity Strategy was the first actively managed ETF to pass $1 billion in assets under management. But there is a clear trade-off for investors. In exchange for the higher yield, the fund courts greater losses, though the risk of that outcome is limited. Furthermore, the fund’s broad mandate allows management to limit the impact of rising interest rates.

The fund’s one real drawback is the annual expense ratio of 0.35 percent. Although that’s inexpensive compared to most short-term bond funds, these expenses could drag on performance. Nonetheless, PIMCO Enhanced Short Maturity Strategy is worth the price if you can’t tap into another money market fund or certificate of deposit yielding better than 1.5 percent.

This is not a stable value fund. Investors who need cash within a few months will be better served by a traditional money market fund. But offering a superior yield than traditional money markets and flexibility in an uncertain rate environment, PIMCO Enhanced Short Maturity Strategy is an excellent parking place for cash. Buy at current prices.