Over half of corporate cash remains in bank accounts

Bank1Bank deposits hold more than half of corporate cash and money market funds just over a quarter, according to a survey of professionals in the cash management area. Liquidity continues to be a central concern and explains the choice of investments. Cash can be managed in various ways, including investment in asset-backed securities. Usage of bank accounts is most prevalent in Asia, where 68% of assets are held in bank deposits. In Europe, 48% of assets are held in bank deposits, while the figure is 38% in the Americas, according to the JP Morgan Asset Management's (JPMAM) Global liquidity investment peerview 2014, which surveyed over 300 chief investment officers, treasurers and other decision makers. The survey also finds that in an effort to control risk, the majority of respondents' investment policy statements define portfolio duration and credit standards for both longer- and shorter-term securities. Larger firms tend to be less conservative in their definition of permissible credit rating, which allows them to take on additional interest rate and credit risk. A majority of respondents, JPMAM says, plan to stay the course with their current cash allocation through 2015 even in the face of low interest rates and regulatory concerns. In selecting a cash manager, the top three criteria in order of importance are: performance/risk-adjusted returns; investment expertise; and firm relationships. ©2014 funds europe

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