5 min readFollowing the collapse of Lehman Brothers in 2008, the rapidly deteriorating economic environment in the U.S. and abroad caused most treasurers to reevaluate their cash investment strategies, with a specific focus on restricting investment in certain asset types. Some companies implemented these restrictions by changing their investment policies, while others simply gave instructions to their…
4 min readAbstract For institutional cash investors unsure of separately managed accounts in a rising interest rate environment, our scenario analysis suggests that a laddered portfolio of agency and corporate securities with a modest WAM could outperform the government money market fund proxy with negligible unrealized loss concerns. Both agency and corporate portfolios with maximum maturities of…
4 min readAbstract Jerome Powell is the new Chair of the Federal Open Market Committee (FOMC) following Janet Yellen’s retirement from the Fed. In the near-term, Powell is likely to continue on the projected path of gradual interest rate hikes while also focusing on transparency and deregulation. However, as his background is not in economics, he will…
2 min readAbstract The return of yield opportunities presents institutional cash investors with fresh challenges. Higher rates have driven up the cost of staying with ultra conservative instruments. Money market fund reforms have left corporate cash managers with few clear choices to add yield. And historically popular cash vehicles that have undergone significant changes demand a fresh…
3 min readWhen the Fed raised interest rates last December for the first time since 2008, many corporate cash investors who had lived through previous tightening cycles expected a series of increases through 2016. But worldwide turbulence in equity markets in the first quarter, additional easing by central banks overseas, and ongoing uncertainty about the U.S. economy…
1 min readAbstract For institutional cash investors unsure of separately managed accounts in a rising interest rate environment, our scenario analysis suggests that a laddered portfolio of agency and corporate securities with a modest WAM could outperform the government money market fund proxy with negligible unrealized loss concerns in a rising rate environment. Both agency and corporate…
2 min readIntroduction It has been more than a decade since the last interest rate tightening cycle. As we dust off this report written more than ten years ago for corporate treasurers on how to weather a rising rate cycle, we are struck by how little we needed to revise its content despite a vastly different cash…
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…
2 min readAbstract BBB and Tier 2 rated debt instruments have evolved to a much larger presence in the short-duration corporate debt market than a decade ago. Default experiences and rating migration data suggest moderately higher credit risk than A-rated instruments, while expected returns also were higher. This ratings category opens up an opportunity set not found…