Let Separately Managed Accounts Help You Weather the Perfect Storm of Uncertainty
Uncertainty is the watchword for institutional cash investors in 2017. Market volatility, fiscal disputes, rising interest rates, geopolitical conflict, headline risk, and last year’s disruptive money market fund reforms have all been amplified by the torrent of tweets from 1600 Pennsylvania Avenue. The result is a perfect storm of uncertainty prompting cash managers to rethink investment strategies from top to bottom.
Our research report this month—Using Separately Managed Accounts (SMAs) to Ride the Tides of Uncertainty—offers one way to confront those uncertainties head on. Many cash investors may be starting to discover that separately managed accounts (SMAs) can provide a welcome degree of predictability and control that other approaches may not. A portfolio of directly purchased securities with laddered maturities can help provide liquidity along with the benefits offered by an upwardly sloping yield curve. A buy-and-hold strategy can also help to minimize risk while offering higher income potential than government money market funds confined by maturity restrictions.
Separate accounts are not, as many still believe, always designed to meet “total return” goals on excess cash with portfolios of longer-term fixed income assets. Some treasury professionals instead are starting to discover that direct investment in portfolios with shorter durations may help provide liquidity, safety and yield—without the risk that comes with commingled investments in money funds. A separate account portfolio won’t eliminate all the uncertainties of the coming year. But it may help to find a way to cope with them. To learn more, download our report on the link below.