2 min readOctober brought a string of articles in the Wall Street Journal and other financial publications highlighting the impact money market fund reform and liquidity coverage ratios may have on corporate cash investments. The gist of these articles was that after years of little environmental change, treasurers are now faced with significant modifications to both prime…
2 min readAbstract Bank deposits have always represented the main cash management vehicle for institutions. Growth in deposits and money market fund balances crisscrossed each other over recent decades. Recent financial regulations, notably the liquidity coverage ratio, net stable funding ratio and G-SIB capital surcharges, caused deposit dynamics to change, reducing banks’ appetite for non-operating deposits. We…
1 min readAugust’s surprise devaluation of the Yuan touched off market volatility not seen in years (I watched the Dow tick down over 1000 points on August 24). While all eyes were on the world’s second-largest economy, we were monitoring cash safe havens of old and pondering how new cash vehicles might handle the past month’s volatility….
2 min readAbstract This commentary addresses a number of liquidity challenges concerning institutional prime money market funds after October 2016. The floating net asset values, the provision of fees and gates and the institutional shareholder syndrome each presents a unique set of challenges. The reformed institutional prime product can remain viable for a certain population of current…
1 min readIntroduction Corporate treasury managers are frequently confronted with the task of picking the right benchmarks for their cash portfolios. Unlike stocks and long bonds, a market-based index is often too long or too risky for cash investments. Some treasurers resort to comparing “yield” earned on investments on the assumption that it is the only relevant…
2 min readIntroduction At first glance, the task of measuring investment returns of corporate cash portfolios seems relatively straightforward, since they most typically invest only in “plain vanilla” securities and have limited numbers of transactions. Treasury practitioners, however, often tell a different tale of performance measurement. One frequent complaint involves apples-to-oranges performance comparisons between money managers. Another…
1 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 satisfy current, future and emergency liquidity needs – and…
2 min readMoney market fund reforms, new banking regulations, and the prospect of rising interest rates are motivating a top-to-bottom restructuring of many corporate cash portfolios in 2015 and 2016. As corporate treasurers strike a new balance of bank deposits, reconstituted institutional money market funds, and separately managed portfolios of directly purchased short-term securities, we expect to…
2 min readAbstract We set out to answer 10 of the most common questions related to writing investment policy statements (“IPS”) for cash portfolios. In doing so, we will provide a number of peer group data comparisons to add insight to the process. The treasury investment management landscape has undergone significant changes. We found that investors recently…
1 min readAs strategies to deal with money fund reform move to the forefront for many treasurers, the landscape for money fund alternatives has evolved significantly. One of the largest factors impacting alternate investment strategies has been the supply contraction of high-grade securities rated AA or higher. Gone are the days when a cash portfolio could be…