2 min readAs we enter the second decade of the new century, the world financial system has just emerged from a near death experience and embarked on a new journey of redefining itself. Having witnessed the subprime meltdown, the bankruptcy of Lehman Brothers, and the collapse of the Reserve Primary money market fund, corporate cash investment professionals…
3 min readLast week’s unveiling of the long-awaited new rules governing money market funds prompted a flood of commentary from the fund industry and reports from the financial press in a matter of just a few days. This month, we wish to focus specifically on how we believe the changes will have profound ramifications on all short-duration…
2 min readInvestment Considerations We think there may be a shorter than expected timetable for Fed rate hikes and that it may be prudent to keep a portfolio of shorter maturity bonds and floating rate securities. This strategy also applies to money market funds with shorter weighted average maturities (WAMs). We believe yield levels may rise causing…
3 min readOver the past two years, as we anticipated the credit cycle downturn, we gradually and methodically worked to reduce credit exposure in our managed portfolios. In light of the dramatic capital markets disruptions and the extreme market illiquidity after the bankruptcy of Lehman Brothers, we temporarily ceased purchases of all non-government guaranteed debt. Additionally, we…
2 min readExecutive Summary This update to our original whitepaper published in April 2006 seeks to answer two questions: 1) Are prime funds getting safer? 2) Are all prime funds alike? The general risk profile of the large prime fund group has improved since our last publication. The average fund now has better liquidity, better credit quality…
2 min readThe month of September was one that brought several important shifts to the economic and credit landscape and it’s no coincidence that it marked the one-year anniversary of a near global financial meltdown that was averted by unprecedented government support. Analyzing side-by-side Federal Open Market Committee statements from August 12th and September 23rd reveals language…
2 min readExecutive Summary We set out to answer 10 of the most common questions related to investment policy statement writing for cash portfolios. In doing so, we will provide a number of peer group data comparisons to further add helpful insight in the process. The questions address the following investment subjects: Maximum liquidity limits Minimum credit…
3 min readConfession: This eye-catching title is not our invention. It is borrowed from a panel discussion on money market fund distribution strategies held at the Crane Data Money Fund Symposium in Providence, RI in late August. We, however, think it brings out a salient point – growth for growth’s sake can be a recipe for disaster….
2 min readOn June 24, 2009, the Securities and Exchange Commission (SEC) announced the long-anticipated proposed amendments to the 2a-7 rule that regulates money market mutual funds. The proposed changes were prompted by the extraordinary events in the money fund industry that took place after the Reserve Primary Fund’s net asset value (NAV) dropped below a constant…
3 min readAs signs of stability returned to capital markets in recent weeks, we’ve begun to hear investors inquire as to how to improve yield in their cash portfolios. We acknowledge that, first and foremost, the return of risk appetite is a welcome and healthy sign after a period of frozen credits and a crisis of confidence….