Investment

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Lost in the Bermuda Triangle of ‘Security, Liquidity, Yield’? Five industry experts from leading investment management companies joined TMI for a roundtable event, chaired by the Institutional Money Market Funds Association, to discuss some of the most pressing issues facing corporate investors today.

Lost in the Bermuda Triangle of ‘Security, Liquidity, Yield’?

 

Five leading investment management companies joined TMI to discuss some of the issues that corporate investors are facing today.

In September 2015, five leading investment management companies joined TMI to discuss some of the issues that corporate investors are facing today, and how they should prepare for changing times ahead with both banking and money market fund (MMF) reforms, and the ongoing challenges of a low or negative interest rate environment. The panel was kindly chaired by Susan Hindle Barone, Secretary General of the Institutional Money Market Funds Association (IMMFA), the trade association which represents the European constant net asset value (CNAV) money market fund industry.

Susan Hindle Barone, IMMFA

Given the developments that are taking place in the cash investment market, how would you characterise corporate investment priorities at the moment?

Kathleen Hughes, GSAM

In Europe, the challenge is to maintain a positive return on assets in a negative rate environment.

We’re seeing a number of broad themes, some of which are global, and some that are more specific to particular locations. In the UK, for example, treasurers are taking a strategic view, looking at separately managed accounts (SMAs), longer-dated deposits, and term repos in some cases, although with non-traditional collateral as it’s quite difficult for corporate triparty repo investors to access government collateral repo. Also, the documentation can be a deterrent for some treasurers.

In Europe, the challenge is to maintain a positive return on assets in a negative rate environment. We’re seeing clients reducing their euro cash balances in favour of other currencies wherever possible, and looking at opportunities such as SMAs to boost returns.

In the US, regulation is the primary focus, as Basel III and changing bank regulations are having an earlier impact, and money market fund (MMF) regulations have changed and will be implemented more quickly than in Europe. Treasurers are using SMAs more, and new products are coming to market.

Susan Hindle Barone, IMMFA

I think the point you make about the US is particularly interesting as the final implementation date for new regulations is only a year away, while changes have not yet been introduced in Europe. So there could be a separation between these markets for the time being.

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