Thumbnail: 

As economic and regulatory challenges create greater complexity in managing cash, corporate treasurers have become aware of the importance of defining and delivering on the right investment policies, finds a global cash management study by SunGard.

The study finds that bank deposits are the most popular investment type for 67% of respondents, followed by money market funds (MMFs) which are used  48% of respondents.

While bank deposits will continue to form the mainstay of corporate investment policy, with more than 60% of respondents noting the importance of bank deposits in the future, this represents a drop by more than 6% from today’s levels.

More than half of the respondents that use MMFs identify them as an extremely important part of their future investment strategy, representing an increase of more than 6%. However, more than half of respondents reported that they do not currently use MMFs.

Among those using MMFs, 37% access them via online portals

“Finding the appropriate repositories for cash and maintaining access to liquidity are the chief concerns of treasurers today," says Enrico Camerinelli, senior analyst at Aite Group. "As bank deposits remain the mainstay, money market fund investments are growing on a global scale."

Camerinelli adds that while investors in the US and the UK have great familiarity with money market funds, standard definitions and availability of money market funds in Europe and Asia are now driving increased adoption, especially as fragile economic conditions will demand diversified cash investment policies.

"As confidence in money market funds grows, companies are likely to look to increase visibility, automation and auditability that online portals offer, particularly when integrated with a treasury management system," notes Camerinelli.

Bob Ward, chief operating officer of SunGard’s wealth management business, said, “One of the most significant investment challenges faced by corporate treasurers and cash managers today is the ability to forecast cash flow accurately."

Ward adds that market liquidity constraints and the need to gain transparency around counterparty, sovereign and liquidity risks are driving demand for automated solutions.

According to Ward, the capabilities of online money market fund portals, such as the SGN Short-Term Cash Management portal, have developed considerably in recent years, providing not only transactions capabilities, but also visibility over fund metrics and asset allocation, as well as risk analysis.

The SGN Short-Term Cash Management portal is a global, multi-fund trading platform that helps corporate treasurers increase efficiency in researching, analyzing and gathering relevant information to help optimize short-term investment strategies.

MORE ARTICLES ON TREASURY MANAGEMENT

Quote Image: