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Our views 11 July 2019

Making treasury cash work harder

By Craig Inches, Head of Rates and Cash

5 min read

Most treasury investors aim to strike the right balance between liquidity and security, with investment return (yield) an important, but secondary consideration. However, security and liquidity on the one hand and yield on the other aren’t mutually exclusive. We’ve had this conversation with many clients and helped them to optimise their treasury portfolios.

What’s the portfolio for? Let’s consider some key questions. Is the money needed for day-to-day-expenditure? Is there a project or deadline for which these funds will be required? Are they currently unallocated, with their use to be defined at a later date? What is your attitude to risk? You may find that you can break down your treasury portfolio into different components, based on when each will be needed.

Let’s look at an example. The University of Life (UL) has £50m invested in our Short Term Money Market Fund, which is for day-to-day liquidity and is our lowest risk fund. UL has been invested in the fund for 12 months and hasn’t needed to draw on these funds on a regular basis. By considering the key questions, could this money be working harder for the benefit of the university?

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