Cash Investors Continue to Wade Back Into Non-Governmental Securities
Corporate cash managers by necessity are amongst the most conservative of investors. Before optimizing yield potential, they must often worry first about ensuring liquidity while reducing risk. That’s why in the aftermath of the 2008 credit crisis, corporations hunkered down almost exclusively in government-issued and government-backed debt. For a time, many stopped parking their cash in any vehicles at all other than super-safe, liquid Treasury bills and other guaranteed government-backed notes—in spite of the meager returns.
Over the past decade, while a healthy number of companies continued to ban all but the safest government cash investments, many cash managers began to wade back into the world of non-governmental securities. Now, with the return of higher interest rates, even more institutional liquidity investors are starting to heed calls to seek market-based returns with non-governmental investments that require slightly more appetite for risk.
At Capital Advisors Group, we keep our finger on the pulse of these trends as we advise clients on their cash portfolios. Our September white paper, How are Your Peers Managing their Cash?, surveys our entire client base since the market crash. The report shows significant percentages continue to maintain policies that restrict investments in financial credits (32%) and industrial credits (27%). But the flip side of that calculation means more than two thirds now allow investments in both those asset classes, reflecting a steady, gradual return following near-complete divestiture in the wake of the crisis. Foreign sovereign and agency debt have also come back onto cash managers’ radar, although at much lower percentages, with only 30% of our clients currently permitting those overseas investments.
If you’re wondering how your peers are weighting their portfolios with non-governmental assets which deliver higher potential returns, download our new report today. And for an even deeper drill-down into the data, feel free to contact me or one of our portfolio managers directly at any time.