Back to the Future with Separately Managed Accounts

2 min read

Many institutional cash investors found themselves on the sidelines on October 14, when prime money market funds finally instituted SEC-mandated floating net asset values, optional redemption fees and possible liquidity gates. Confronted with an entirely new risk/reward equation, many investors are investigating the alternatives, either considering making their own direct investments or exploring working with an advisor to invest their cash in separately managed accounts (SMAs).

For older investors who had entered the business before prime funds emerged as the liquid, “no-brainer” solution for cash management, it was a “back-to-the-future” moment. In that earlier generation, managing your own portfolio of cash investments, or working with an advisor to help you stash your cash in a separately managed account, was just one of the things you had to learn from day one. But many of today’s managers who depended on prime money market funds as the default for cash management are heading up a steep new learning curve. In this year’s AFP Liquidity Survey, 44% of respondents said they are now considering separately managed accounts as an alternative to prime money market funds.

Given the current renewed interest in SMAs, this month we have updated one of our most popular research reports ever: “Six Advantages of Separately Managed Accounts.” The white paper takes a close-up look not only at SMAs but at some of the other alternatives cash managers are considering. Notably, it considers whether the new ultra-short bond funds (USBFs) that many are now considering as an alternative may be susceptible to lapses in investor confidence that may lead to runs, despite the appearance of safety and liquidity. The report provides additional advice on assessing risks, how to think about returns, managing reporting and other issues corporate cash managers must deal with in the new, post-reform era. We hope it helps you move up your own personal learning curve quickly as you navigate the new cash management landscape.

DOWNLOAD FULL REPORT

Best Regards,

Ben Campbell
President & CEO

Please click here for disclosure information: Our research is for personal, non-commercial use only. You may not copy, distribute or modify content contained on this Website without prior written authorization from Capital Advisors Group. By viewing this Website and/or downloading its content, you agree to the Terms of Use & Privacy Policy.

Similar Posts

Taking Stock of Japanese Megabanks’ Credit Profiles in Volatile Markets

Taking Stock of Japanese Megabanks’ Credit Profiles in Volatile Markets

Investment Management

4 min read4 min readRecent market turmoil, triggered by the Bank of Japan’s interest rate hike and disappointing US jobs data, has resulted in a sell-off in Japanese megabanks’ stocks. Cash and short-duration bond investors may be wondering if they should worry about these banks’ credit profiles. Here is a balanced analysis to help them make an…

converence table with Capital Advisors Group experts

Registered Investment Advisors vs. Broker-Dealers: Who Should You Work With?

Investment Management

7 min read7 min read Registered Investment Advisors (RIAs) vs. Broker-Dealers (B-Ds): An Overview The services of a registered investment advisor or a broker-dealer should be considered if you are seeking to establish a separately managed account for your institutional cash investments. RIAs that are regulated by the U.S. Securities and Exchange Commission (SEC) have a legal…

dice that all have a single percentage character instead of dots

Putting Cash to Work

Investment Management

11 min read11 min readIntroduction: Higher Rates are Coming to An End Recent comments by Federal Reserve officials indicate that monetary policymakers may soon start lowering short-term rates as inflation and employment data continue to moderate. This shift comes after a period of keeping interest rates more elevated than initially thought. Meanwhile, stockpiles of cash from Covid-era…

Republic First Bank Resolution: Minimal Disruption Expected

Republic First Bank Resolution: Minimal Disruption Expected

Investment Management

2 min read2 min readOn Friday afternoon, the FDIC took the failed Republic First Bank into receivership and the majority of the bank’s assets and liabilities were sold to Fulton Bank on the same day. We do not expect this bank failure to create systemwide turmoil similar to what we experienced in March of 2023 due to…

Negative Rates are No More, But The Era of Big Central Banks Reigns Supreme

Negative Rates are No More, But The Era of Big Central Banks Reigns Supreme

Investment Management

7 min read7 min readIntroduction The Bank of Japan’s (BOJ) meeting last month was perhaps the most consequential central bank meeting of the entire year. The BOJ raised interest rates by 10 bps  to 0-0.10%, all-in-all a small amount in magnitude.  However, this marked the first interest rate increase by the central bank in 17 years. Moreover,…