For treasurers, achieving acceptable investment returns is becoming increasingly difficult. Their priority remains to preserve value, but with many companies currently cash-rich, there is often considerable excess liquidity that needs to achieve optimum performance. With interest rates low, treasurers can no longer simply invest this cash in high yield deposits or money market instruments.
The range of investment opportunities is greater than ever. While low-risk deposit or money market investments remain the primary destination of treasurers' funds, there is a growing range of alternatives for excess cash that can be locked away for relatively long periods of time. These include financial instruments such as structured deposits and credit derivatives.
It is now possible for the treasurer to leverage the full capabilities offered by large financial services groups in order to achieve the optimum trade-off between liquidity, risk and return. This takes advantage of the full range of product, credit research, trading and investment management capabilities. But, for this to be successful, an investment strategy should be drawn up that matches the corporate's guidelines or objectives.
