3 min readWhen the Fed raised interest rates last December for the first time since 2008, many corporate cash investors who had lived through previous tightening cycles expected a series of increases through 2016. But worldwide turbulence in equity markets in the first quarter, additional easing by central banks overseas, and ongoing uncertainty about the U.S. economy…
4 min readMany people tend to believe that the world of corporate cash investments revolves around two limited choices: bank deposits and money market funds. But several decades ago before the rapid adoption of prime money funds, a third choice—direct purchase and management of marketable securities in separately managed accounts (SMAs)—was routinely used for cash management. After…
1 min readAbstract For institutional cash investors unsure of separately managed accounts in a rising interest rate environment, our scenario analysis suggests that a laddered portfolio of agency and corporate securities with a modest WAM could outperform the government money market fund proxy with negligible unrealized loss concerns in a rising rate environment. Both agency and corporate…
1 min readAbstract Greater vigilance is required of today’s treasury investment professionals. Neither bank deposits nor money market funds alone 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…
3 min readAs we approach the first rate hike cycle in almost a decade, it makes sense for cash investors to take stock of the state of the economy, as well as the Fed’s view of it. The pace at which the Fed raises interest rates will be important to anyone managing a cash portfolio, and close…
2 min readThis book provides chief financial officers and corporate treasury executives with an overview of changes in the cash investment landscape and a guide to more effective hands-on management of corporate cash portfolios. Its three chapters explain: 1) why many investment managers are migrating to separately managed accounts (SMAs); 2) what investment policies for cash management…
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…
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 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…
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…