Cross-Sector

European Financial Debt and U.S. Prime Money Market Funds: Understanding the Connections and Evaluating the Exposure

European Financial Debt and U.S. Prime Money Market Funds: Understanding the Connections and Evaluating the Exposure

Credit & Risk

2 min readAbstract Credit concerns have once again taken center stage as the treasury community closely monitors its cash investments. These fresh concerns are relevant to U.S. cash and short-duration investors because prime money market funds are major investors in European financial debt. Approximately two-thirds of commercial paper and one half of jumbo bank deposits available to…

The New Normal in the Cash Investment Landscape

The New Normal in the Cash Investment Landscape

Credit & Risk

2 min readAs we enter the second decade of the new century, the world financial system has just emerged from a near death experience and embarked on a new journey of redefining itself. Having witnessed the subprime meltdown, the bankruptcy of Lehman Brothers, and the collapse of the Reserve Primary money market fund, corporate cash investment professionals…

Potential Impacts of the New Money Fund Rules

Potential Impacts of the New Money Fund Rules

Investment Management

3 min readLast week’s unveiling of the long-awaited new rules governing money market funds prompted a flood of commentary from the fund industry and reports from the financial press in a matter of just a few days. This month, we wish to focus specifically on how we believe the changes will have profound ramifications on all short-duration…

Pulling Back from the Abyss

Pulling Back from the Abyss

Investment Management

3 min readOver the past two years, as we anticipated the credit cycle downturn, we gradually and methodically worked to reduce credit exposure in our managed portfolios. In light of the dramatic capital markets disruptions and the extreme market illiquidity after the bankruptcy of Lehman Brothers, we temporarily ceased purchases of all non-government guaranteed debt. Additionally, we…

How Safe Are Prime Money Market Funds? (And Are All Funds the Same?)

How Safe Are Prime Money Market Funds? (And Are All Funds the Same?)

Credit & Risk

2 min readExecutive Summary This update to our original whitepaper published in April 2006 seeks to answer two questions: 1) Are prime funds getting safer? 2) Are all prime funds alike? The general risk profile of the large prime fund group has improved since our last publication. The average fund now has better liquidity, better credit quality…

Remain Diligent As Credits Improve

Credit & Risk

2 min readThe month of September was one that brought several important shifts to the economic and credit landscape and it’s no coincidence that it marked the one-year anniversary of a near global financial meltdown that was averted by unprecedented government support. Analyzing side-by-side Federal Open Market Committee statements from August 12th and September 23rd reveals language…

Shaping Investment Policies for a Safer Cash Portfolio

Shaping Investment Policies for a Safer Cash Portfolio

Investment Management

2 min readExecutive Summary We set out to answer 10 of the most common questions related to investment policy statement writing for cash portfolios. In doing so, we will provide a number of peer group data comparisons to further add helpful insight in the process. The questions address the following investment subjects: Maximum liquidity limits Minimum credit…

Grow or Die?

Grow or Die?

Credit & Risk

3 min readConfession: This eye-catching title is not our invention. It is borrowed from a panel discussion on money market fund distribution strategies held at the Crane Data Money Fund Symposium in Providence, RI in late August. We, however, think it brings out a salient point – growth for growth’s sake can be a recipe for disaster….

Wringing the Risks Out of Money Funds

Wringing the Risks Out of Money Funds

Credit & Risk

2 min readOn June 24, 2009, the Securities and Exchange Commission (SEC) announced the long-anticipated proposed amendments to the 2a-7 rule that regulates money market mutual funds. The proposed changes were prompted by the extraordinary events in the money fund industry that took place after the Reserve Primary Fund’s net asset value (NAV) dropped below a constant…