Bond experts suggest optimal placement for lower interest rates.

Now may be the time for investors to begin preparing for lower yields on their cash holdings.

If the Federal Reserve signals interest rate cuts in September, Pimco's Jerome Schneider sees a significant disadvantage in holding onto cash as money market yields decrease.

The head of short-term portfolio management at the firm informed CNBC's "ETF Edge" last week that they were rapidly moving from a 5% risk-free rate to a 3.5% risk-free rate on their cash.

As of Sunday, the 100 largest money market funds were still providing a competitive return on cash at 5.12%, while the benchmark decreased slightly to 3.93% early on Monday.

Schneider advises investors to consider exploring other fixed income options, specifically exchange-traded funds, which may provide higher returns in the future.

He advised moving to short ETF strategies, low-duration ETF strategies, and bond and core ETF strategies with actively managed components.

'You shouldn't overpay for your cash exposure'

Joanna Gallegos, co-founder of BondBloxx, views bond ETFs as a vital tool for earning returns.

Treasury exposure can be effectively managed through ETFs, which provide a more flexible and cost-effective alternative to traditional CDs or money market funds, according to Gallegos.

As a reason for investors to look elsewhere, she mentioned higher fees on some money markets.

"In this market, it's not acceptable to pay 40 basis points for a 5% yield. There are plenty of opportunities for higher yields in both the Treasury and short-term sides, so you shouldn't overpay for your cash exposure."

Schneider of Pimco believes that not all cash on the sidelines will move into higher-paying assets, even with the potential to earn more yield elsewhere.

"He stated that it's not entirely intended for use in terms of risk appetite. Our assessment suggests that it's approximately 15%, which is a significant amount of money, ranging from $600 to $800 billion. However, we're not finding that it's being utilized efficiently."