The New Generation of Cash Management

An Interview with Jason Singer, Managing Director, Head of International Cash Portfolio Management, Goldman Sachs Asset Management

AAA-rated money market funds (MMFs) including government funds, have typically been seen as the safe haven that many investors have come to rely on during the turbulence of recent times. But with market confidence starting to return, albeit tentatively at this stage, how are treasurers likely to develop their cash investment strategy? In this interview, we are delighted to talk to Jason Singer of Goldman Sachs Asset Management (GSAM) on the changes that he is witnessing amongst corporate investors.

Corporate investors have been increasingly attracted to AAA-rated MMFs, particularly government funds, over the past year, during a period of heightened concern over counterparty and liquidity risk. Consequently, security and liquidity have been considered paramount, with little if any focus on yield. Do you see any signs that corporate investment behaviour is changing and to what would you attribute this?

Absolutely, the past year or so has seen a so called ’flight to quality’ with assets under management in MMFs almost doubling. We have also seen the emergence of government and treasury MMFs, a new category of funds within the money market group. These funds invest exclusively in government and treasury debt and have been very popular with European and Asian investors. As markets stabilised and confidence started to return in the second quarter of this year, AAA-rated MMFs continued to generate phenomenal interest, but some investors also started to seek higher yields than those provided by government funds in particular. As a consequence, there has been a modest 10% fall in assets held in government funds while funds including instruments such as commercial paper have started to grow.

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