Cash Safe Havens, New and Old

1 min read

August’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.

Institutional prime money market funds will be recast in a little over a year after building to over $2.5 trillion in assets before the ’08 crash. As new rules go into effect in 2016, this safe haven will evolve to an institutional-only floating fund with fee and gate redemption features. For better or worse, current prime funds as we know them will effectively go away, ending a 20-year reign as one of the most popular and utilitarian investment vehicles for cash managers.

As the sun sets on prime funds, new offerings, along with a return to core treasury investment practices, will be the new norm. Huge improvements in technology supporting separate accounts and do-it-yourselfers alike are facilitating this return to core treasury practices. From order management systems to reporting platforms, it is infinitely easier to oversee one’s cash portfolio today than it was 20 years ago.

The new floating NAV offerings will also play a part in new cash strategies. They will be a departure from today’s prime funds, with different risk and utility characteristics, but should be considered as one part of a multifaceted approach. So, to open the investigation into this new breed of funds, this month’s research takes a closer look at the new floating prime funds and how they may be used in an overall liquidity strategy.

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,…