1 min readWith sweeping changes coming to short term cash markets, along with a likely Fed policy shift, now is the time for a bottom-up reevaluation of cash investment strategies. Regulatory changes are altering the risk-reward relationship of the most staid solutions in cash markets, as old products are reinvented and new ones introduced. It’s been over…
2 min readFebruary brought a string of announcements from several of the largest money fund managers in the country detailing new investment strategies in response to the money fund regulatory overhaul announced by the SEC in 2014. These announcements gave clarity to the changing utility of money market funds and outlined how the investment landscape will be…
2 min readAbstract As large money market fund sponsors begin to release their new fund directions, the wait may be over for cash investors to get their own strategies in place. The recent announcements allow us to gauge different paths forward for the industry and help investors gain insight into what to expect. Among a lineup of…
1 min readAs we transition into a new year, I reflect on 2014 as a year of steady but slow economic progress. Continued improvements in the labor markets moved the U.S. closer to the self-sustaining economy the Fed is targeting. Quantitative easing ended quietly while the U.S. equity markets continued their march upward, adding to an improved…
2 min readAbstract The three new trends we watch out for in 2015 include the start of an interest rate tightening cycle, consequences of worsening supply shortage, and resurging geopolitical uncertainties. We recommend moderate portfolio duration and a laddered portfolio structure. Other suitable tools may include callable securities, floating rate notes and bonds with putable and callable…
2 min readAbstract A well-structured separately managed account may serve liquidity investors better than money market funds, especially when faced with uncertain interest rate prospects and opportunity costs. Given historical fed funds and LIBOR rates, a moderately structured hypothetical SMA portfolio outperformed a hypothetical MMF in each of the last three rate tightening cycles. Today, SMAs may…
2 min readAbstract This research commentary discusses liquidity in the context of corporate cash portfolios, coming challenges in the post-crisis era, why liquidity reversal may be a systemic concern, and how investors should prepare for the new liquidity equilibrium in a normalized interest rate environment. Our suggestions for corporate cash professionals include the following: Review and Revise…
1 min readAs goes the real estate mantra, “location, location, location”, so liquidity is paramount to corporate treasurers. It’s etched predominately as a primary objective into almost every cash investment policy that we’ve ever reviewed. So, with the Fed’s latest round of quantitative easing set to wind up in just 45 days, all eyes were on Chairperson…
1 min readThe SEC’s announcement last week that institutional prime money market funds will soon incorporate floating NAVs, along with potential fees and gates on liquidity during times of stress, ends nearly five years of discordant regulatory deliberations. During that time, Capital Advisors Group has been active in the assessment of money fund risks through our FundIQ®…
2 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…