2 min readExecutive Summary Investment Considerations: Government Sponsored Enterprises Government Money Market Funds FDIC TLGP Guaranteed Debt Foreign Government Guaranteed Debt Beware Certain “Industrial” Credits Institutional cash investors found themselves in a pickle when the market’s desire for safety made treasury securities and treasury money market funds inaccessible. However, when the default option is no longer an…
3 min readExecutive Summary The concurrent use of commingled and separate accounts may help in optimizing corporate cash management. Among corporations, separate account management has a limited following – about 20% in separate account management vs. 76% in money funds and 22% in other funds. Six Advantages of Separately Managed Accounts: Tailored Risk Management Transparency Higher Return…
2 min readThe Aftermath of a Crisis The credit market crunch that started in August 2007 has had a widespread impact on the treasury community’s liquidity management practices. Unlike in any previous market downturns, this credit market crisis started with a popular cash investment vehicle, asset-backed commercial paper, and continued with a system-wide shutdown of another, auction…
1 min readExecutive Summary The auction market relies heavily on investor confidence. Once certain bonds were perceived to be troubled, similar securities, even those with well run programs, may see their auctions at risk. The scenario of a bond ultimately curing itself with a successful auction is unlikely. It is unrealistic to assume that dealers will eventually…
2 min readExecutive Summary Our five core themes for the risk-averse, short-duration, and buy-and-hold corporate cash investor are: Economy and Interest Rates: Looming Recession Risk and Lower Rates Corporate Credit: Battered and Cheapened, but Not Down and Out Market Technical Factors: A Wary Market Short on Liquidity Asset-backed Securities (ABS): Show Me the Collateral Return Expectations: A…
2 min readAmidst the financial rubble brought on by the subprime crisis, might there be havens for cash (aside from under the mattress) for the corporate treasury investor? We think so. First, let’s review what led to the flurry of recent negative headlines. Since last August, there have been large write-downs by financial firms with credit exposure…
2 min readExecutive Summary The concurrent use of commingled and separate accounts may help in optimizing corporate cash management. In corporate cash management, separate account management has a limited following – about 20% vs. 76% in money funds and 22% in other funds. Six Advantages of Separately Managed Accounts: Tailored Risk Management Transparency Higher Return Potential Free…
2 min readExecutive Summary Ratings don’t tell the whole story. A basket of bad apples won’t make a good pie. Hidden leverage may sneak up on you. Not all repos are alike. Extension risk may cost you more. Structured notes equal speculation. Do you want to “buy” or “sell” protection? Hedge funds are not for the faint…
3 min readExecutive Summary Superior returns do not happen by chance all the time, so it is relevant to identify active strategies to help achieve them. We focus on the three broad investment strategies used by most fixed income managers: duration management, sector rotation, and credit selection. Excess return potential from active duration management can be sizeable,…
2 min readExecutive Summary As 2006 drew to a close, corporate cash investors found themselves in a surprisingly benign market. Despite the 100 basis-point increase in the Fed funds rate, major short-duration bond indices brought in positive returns almost universally. As managers of corporate cash investments, we picked five trends that reflect what we feel may have…