2 min readIntroduction One short year ago, we discussed three key trends for 2011: low interest rates, a spreading sovereign debt crisis and persistent financial regulation. And we started our 2011 commentary with the phrase, “meet the New Year, same as the old.” Have we caught you in a moment of déjà vu? For 2012, we see…
1 min readAs a business looks for strategic opportunities to deploy its cash, maintaining liquidity in its cash investment accounts is crucial. Money market funds have been the traditional answer to liquidity, but their engineered liquidity has come under scrutiny from both investors and regulators alike. Potential regulatory changes announced by the SEC on November 7 may…
3 min readAbstract For four decades, many corporate treasurers successfully employed a hands-off approach to managing the money market funds in their portfolios. However, recent market events revealed the danger in this approach. Like other investments, money market funds must be evaluated to determine how they fit into a firm’s overall risk management strategy. A money market…
1 min readBest practices for corporate cash risk management have evolved rapidly over the years. The pace of this evolution accelerated significantly since the credit crisis, where both investment and counterparty risk management took center stage. Treasurers wanted to know specifically what their exposures were. They sought detailed credit assessments of the exposures and looked to understand…
2 min readAbstract Separate accounts may offer greater return and reduced credit risk compared to prime money market funds. By examining current and future liquidity needs and the potential for significant deviations from cash flow projections, corporate treasurers may construct portfolios with direct investments in high-quality credits that provide current, future and emergency liquidity – and still…
3 min readAbstract Treasury rates may remain at zero or negative levels for a prolonged period and additional banks may begin to charge “extraordinary deposits” fees, pushing depositors back into the money markets. It just may be a matter of time before many, if not most, treasurers are confronted with negative portfolio yield. Private and public sector…
3 min readIntroduction How long does it take for “green shoots” to grow into a “soft patch”? For the U.S. economy, it has taken a little more than two years. In his famous 60 Minutes interview on March 15, 2009, Federal Reserve Chairman Ben Bernanke popularized the phrase “green shoots” to describe the growing confidence in the…
2 min readAbstract Our recent participation at the Securities and Exchange Commission (“SEC”) roundtable discussion on money market funds and systemic risk gave us the impression that the government is moving closer to a policy draft on money market fund reform. Despite overwhelming complaints, the floating net asset value (“NAV”) approach remains a top choice for the…
2 min readIn May, Capital Advisors Group was invited to the Securities and Exchange Commission’s headquarters in Washington, D.C. to participate in a roundtable discussion on money market fund risk and to help consider potential policy changes for money market funds (the archived webcast can be found here). After years of publishing research on money fund risk,…
1 min readManaging corporate cash with the objectives of capital preservation, liquidity, and return is often thought of as a staid and steady endeavor. However, in reality, buy lists need to be actively adjusted to preemptively manage credit risk. Over the last 12 months, credits have been affected by, among other things, earnings reports, regulatory reform, and…