Home | Finance & Ops | Survey: Finance pros still rank safety as top corporate investment objective

Survey: Finance pros still rank safety as top corporate investment objective

By
Font size: Decrease font Enlarge font
Survey: Finance pros still rank safety as top corporate investment objective

56% of all corporate cash holdings are maintained in banks--the highest rate in 10 years.

Treasury and finance professionals continue to value safety of principal above all when investing corporate cash, but the number fell 3% in 2015, according to new research by the Association for Financial Professionals.

The survey revealed a continued stance on preservation of principal in finance professionals' safety-first investing attitude—a sign that companies may not be willing to accept more risk in order to earn more yield on corporate investments just yet. Additionally, 31% cite liquidity as the primary investment objective—the highest since AFP began tracking the importance of organizations' cash investment objectives in 2008.

"Companies are relying heavily on treasury and finance professionals to chart their investments through unprecedented times."

One possible factor in finance pros' downplaying safety could be Securities and Exchange Commission rule changes to money market funds. The new rules do not take effect until October 2016, but a majority of organizations are planning to make changes in how they invest in prime MMFs.

A full 56% of all corporate cash holdings are maintained in banks—the largest percentage reported since AFP began its Liquidity Survey series in 2006.

"As interest rates continue to stay at historic lows, and regulatory uncertainty looms larger, treasury and finance professionals must be more strategic than ever in their corporate investments," said Jim Kaitz, president and CEO of AFP. "Companies are relying heavily on treasury and finance professionals to chart their investments through unprecedented times."

"The results of this liquidity survey confirm that the changing cash landscape is top of mind for our treasury clients," said Barry F.X. Smith, global head of SSGA's cash management business. "Money market reform makes this landscape more challenging to navigate and investors need new insights to help them succeed in this period of uncertainty and change."

 

 

Join PRESIDENT&CEO on LinkedIn

Subscribe to comments feed Comments (0 posted)

total: | displaying:

Post your comment

  • Bold
  • Italic
  • Underline
  • Quote

Please enter the code you see in the image:

Captcha