Stable Returns in a Volatile Investment Landscape

by Neil Hutchison, Executive Director, J.P. Morgan Asset Management

2016 will be remembered for many reasons, but from a corporate perspective one of this year’s headlines is that corporate cash holdings have increased once again. Moody’s reported in May 2016 that cash holdings amongst US corporations alone had reached $1.7tr, $1.2tr of which is held outside the United States. However, this is a global phenomenon, affecting treasurers of companies headquartered around the world. Higher cash levels make it more difficult for treasurers to find appropriate repositories for cash that meet the company’s investment criteria, on top of the ongoing challenges of low or negative interest rates and significant regulatory change. In this environment, an investment choice that is growing in popularity is step-out investment strategies, allowing treasurers to seek greater returns and diversification on portions of their cash.

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