Does flexibility meaningfully improve long-term portfolio outcomes, or is full investment still optimal.?

In long-term portfolio construction, being fully invested is often presented as the optimal default, supported by historical return data and opportunity cost arguments. Over extended periods, idle capital tends to reduce nominal returns relative to a fully invested benchmark. At the same time, some investors intentionally preserve flexibility through modest allocations that allow rebalancing, drawdown deployment, or reduced forced selling during market stress. While this approach may lower expected returns, it could potentially improve risk-adjusted outcomes depending on how it is implemented. From a structural perspective, this raises a broader question: should flexibility be viewed primarily as a form of risk management, or simply an inefficiency that long-term investors should minimize? For those focused on long horizons, how do you think about this tradeoff in practice? Do you evaluate flexibility explicitly within your asset allocation framework, or treat it as noise relative to staying fully invested.?