Investing in cash equivalents is primarily associated with which characteristic?

Investing in cash equivalents is characterized primarily by high liquidity, which refers to the ease with which an asset can be converted into cash without significantly affecting its price. Cash equivalents include assets like treasury bills, money market funds, and certificates of deposit, which can typically be accessed or sold quickly. This liquidity is crucial for investors who value having immediate access to their funds or need to maintain a cash reserve for unforeseen expenses or opportunities.

In contrast, high long-term growth potential is more associated with equity or other riskier investments rather than with cash equivalents, which generally offer lower returns. Cash equivalents are designed to preserve capital rather than generate significant growth, making them a safer option for conservative investors. Volatile market performance is also not characteristic of cash equivalents, as they tend to have stable values. Lastly, minimal regulatory oversight does not specifically relate to cash equivalents in the same way that liquidity does; cash equivalents still adhere to various financial regulations designed to protect investors and ensure market stability. Thus, the defining characteristic of cash equivalents is indeed high liquidity.