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…
1 min readAbstract Separate accounts may offer greater return and reduced credit risk compared to prime money market funds. By examining current and future liquidity needs and the potential for significant deviations from cash flow projections, corporate treasurers may construct portfolios with direct investments in high-quality credits that satisfy current, future and emergency liquidity needs – and…
2 min readMoney market fund reforms, new banking regulations, and the prospect of rising interest rates are motivating a top-to-bottom restructuring of many corporate cash portfolios in 2015 and 2016. As corporate treasurers strike a new balance of bank deposits, reconstituted institutional money market funds, and separately managed portfolios of directly purchased short-term securities, we expect to…
2 min readAbstract We set out to answer 10 of the most common questions related to writing investment policy statements (“IPS”) for cash portfolios. In doing so, we will provide a number of peer group data comparisons to add insight to the process. The treasury investment management landscape has undergone significant changes. We found that investors recently…
1 min readAs strategies to deal with money fund reform move to the forefront for many treasurers, the landscape for money fund alternatives has evolved significantly. One of the largest factors impacting alternate investment strategies has been the supply contraction of high-grade securities rated AA or higher. Gone are the days when a cash portfolio could be…
2 min readExecutive Summary The most compelling argument for total return strategies is demonstrated by a difference of 1.17% in annualized returns between the 1-month and the 1-3 year Treasury benchmarks in the 2005-2014 period. The return difference translates into $13.9 million for a hypothetical investment with a starting value of $100 million. Even though neither of…
1 min readAbstract Greater vigilance is required of today’s treasury investment professionals. Neither bank deposits nor money market funds may be appropriate in the post-crisis, post-regulatory environment. As yields start to rise, cash investment strategy decisions that may have been delayed will require serious consideration. Direct purchases in separately managed accounts may become the primary alternative cash…
2 min readExecutive Summary The complementary use of commingled and separate accounts may help in optimizing corporate cash management. The percentage of corporate investors considering money market funds as permissible investments has been declining since 2009, while the permissible use of separately managed accounts has been climbing. Six Advantages of Separately Managed Accounts: Tailored Risk Management Transparency…
2 min readAmong the most interesting statistics in the 2015 AFP Liquidity Survey from the Association for Financial Professionals (AFP) is that 52 percent of corporate treasurers are considering use of separately managed accounts (SMAs) as a response to the 2016 reforms that will change the nature of institutional money market funds. That finding may come as…
1 min readSurvey goal To shed light on treasury departments’ efforts to mitigate liquidity risk in short-term cash investment, debt and forecasting practices and changes over time. What we’ve learned in 2015 Treasury and financial professionals appear to have begun to control bank exposures Decrease in bank deposits Survey results indicate while Money Fund usage is down…