Benchmarks Can Help Put Your House in Order Before October 14

1 min read

With the October 14 imposition of floating net asset values (NAVs) on prime money market funds rapidly approaching, many institutional cash investors are taking a long, hard look at their portfolios. In addition to new prime funds with fundamentally different risk, return and liquidity profiles, investors are also coping with persistent low rates on Treasuries and bank-deposit yields impacted by new Basel III liquidity coverage ratios. In this rapidly changing landscape, choosing the right benchmark to monitor your portfolio’s performance can make a critical difference. A benchmark is the yardstick to direct an investment strategy and track its success. In addition to providing a measure of manager performance, it can be used to simulate interest rate scenarios and analyze trading and opportunity costs.

Our August research report on “Benchmark Selection for Cash Portfolios” updates one of our most popular white papers ever with current advice on how to choose a benchmark that can keep your cash management program on an even keel. Making the right choice among the benchmarks you might use—peer group averages, T-bill indices, LIBOR benchmarks, market value and/or many others—depends on the unique goals and strategy you have set for your cash portfolio. I think you’ll find our timely guide to choosing and using the right benchmark invaluable as you navigate an entirely new era of cash management.

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Best Regards,

Ben Campbell
President & CEO

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