Capital Advisors Group published the update, "Worried About Declining Yields?" Subtitled, "Laddered SMA Portfolios vs. MMFs and Deposits in a Rate-Cutting Environment," the piece states, "The Federal Reserve recently cut overnight interest rates at its September meeting -- now what? As an institutional cash investor, you might feel like a kid watching the ice cream truck pulling away. But there may be a way to help keep yields from melting away: a separately managed account (SMA) built on fixed-income securities and laddered maturities. Compared to the old standbys of money market funds (MMFs) and bank deposits, a laddered SMA may help preserve income for a period of time by locking in current yields and thereby reducing the whiplash from policy moves. Our goal in publishing this report is to highlight how institutional cash management strategies that include fixed-income laddering may be beneficial when seeking higher yield and stability after Fed rate cuts."
It explains, "Over the past few years, an inverted yield curve -- where short-term rates outpace long-term rates -- tempted some institutional investors to park cash in MMFs or bank money market deposit accounts (MMDAs). While these instruments may be attractive due to their convenience, daily liquidity, and principal protection due to underlying government securities or FDIC deposit guarantees up to $250,000, they typically offer yields more closely tied to the federal funds rate (FFR), often surpassing individual securities like commercial paper (CP) or corporate bonds with maturities beyond overnight."
CAG's Lance Pan writes, "MMF and MMDA yields tend to dance to the Fed's tune, set by the FOMC to balance inflation and employment goals. But longer-maturity fixed income securities? They may be less beholden to these whims and may be more influenced by market expectations and economic data. After the 2024 rate cuts and subsequent pause at 4.25%-4.50%, some managers extended maturities to shield against future declines, while others preferred the status quo."
He states, "But there's a catch: MMFs and bank deposits are tethered to the federal funds rate. Typically, when the Fed cuts the FFR, other short rates quickly reset. In contrast, longer-maturity securities tend to reset more slowly -- their coupons remain fixed until maturity. This difference is where a laddered SMA strategy may offer advantages."
A section titled, "Why an SMA May Be Beneficial Now: Five Key Reasons" says, "Despite the lengthier set up process associated with SMAs, which typically involves adopting an investment policy and engaging an account manager, they may provide the following potential benefits compared to MMFs and deposits: (1.) Lock it in while you can. MMF and deposit yields typically decline as soon as the FFR moves lower. Purchasing high-quality bonds and notes today may help to lock in those coupons for their full term, supporting the preservation of a portfolio's yield potential for longer. (2.) Deposits generally pay less than market rates. Bank deposit yields are generally based on balance-sheet needs and loan demand, not strictly off of market yields. Historically, deposit rates tend to lag on the way up but can adjust downward quickly when cuts begin."
Other reasons include: "(3.) MMF reforms cap yield potential. Recent SEC reforms increased daily and weekly liquidity requirements, shortened portfolio weighted average maturities (WAMs), and introduced liquidity fees for institutional prime/tax-exempt funds.... (4.) Budget stability matters. Even in a comparable yield situation over an investment horizon, a laddered portfolio may offer steadier and more predictable income potential than MMFs or deposits, which tend to drop in step with each Fed cut -- an advantage for budgetary spending. (5.) If cuts accelerate, SMAs have the potential to shine. In a faster-easing scenario, MMF and deposit yields may drop quickly. A prudently laddered SMA may help preserve higher coupons over the next 12–24 months while maintaining staggered liquidity."
On the "Potential Advantages of SMAs Over 'Pooled' Short Vehicles," CAG cites, "Customization: MMFs are managed to satisfy the investment objectives of a broad shareholder base and tight regulatory liquidity/tenor constraints which may provide investors with daily liquidity. SMAs, however, may offer investors more control over the duration, sectors, and liquidity of their portfolios to reflect their business profile, risk tolerance and cash-flow needs. Transparency: An SMA's safety profile maturity, and individual credit exposures are typically more visible to the investor, which may be important to a firm's auditors and boards. MMF portfolio disclosures may be less frequent with fewer details. Yield and stability: Longer WAMs and credit exposures than MMFs may result in higher and potentially steadier income in a declining rate cycle."
Finally, Pan tells readers, "In a falling-rate cycle, it may not be prudent to let cash sit in MMFs or deposits while yields compress. A laddered SMA may allow cash investors to lock in more of today's yield, help produce a more stable future earnings stream, and maintain appropriate liquidity without playing the 'what-did-the-Fed-do-today' game every six weeks. It may be wise to consider reallocating a portion of liquid balances from MMFs and deposits into a laddered SMA of high-quality fixed income securities spread across the yield curve. Investors may want to consider maintaining an average maturity of one year or longer, while shortening WAM as the Fed approaches the 'terminal' target rate."
Capital Advisors Group also recently published, "Stablecoins: The Next Wave in Corporate Cash -- Hype, Help, or Hold Off?" It says, "As a cash investment strategist for institutional liquidity accounts, I would like to discuss stablecoins -- a promising yet emerging digital asset class that blends innovation with familiarity. Think of them as the intriguing newcomer in the world of liquidity portfolios: full of potential, but maybe not quite ready for the spotlight. The key takeaway? Stay open to financial technologies like on-chain assets and tokenization, which may help address longstanding challenges around efficiency and yield. For now, though, stablecoins are best viewed as a developing opportunity -- valuable to watch, but not quite ready for core institutional strategies."
This article continues, "Unless you've been living under a rock, you've probably heard about the GENIUS Act, enacted by Congress on July 18, 2025, creating the first comprehensive U.S. federal framework for payment stablecoins. Is this proof that stablecoins are going mainstream as reserve assets for institutional cash management? You've also likely been bombarded by headlines on tokenized money market funds, stablecoin reserve funds, and even tokenized commercial paper. Asset managers, custodian banks, and fintechs are envisioning digital 'wrappers' for plain-vanilla securities like Treasuries, commercial paper, and repurchase agreements, signaling a potential shift in how institutional liquidity and cash investments are managed."
It says, "Even Treasury Secretary Scott Bessent has publicly championed stablecoins, predicting that dollar-linked stablecoins could contribute $2 trillion or more in demand for U.S. Treasuries over the next few years. But is this stablecoin hype all smoke and no fire? Should corporate cash investors dive in and load their institutional liquidity pools with stablecoins, or stay far away from the 'crazy talk' and stick with the good ol' deposits, T-bills, and money market funds? Or is the more strategic move to land somewhere in between, balancing digital assets with traditional cash management strategies?"
The piece then states, "Stablecoins can be viewed as the reliable anchors of the cryptocurrency realm: digital tokens designed to maintain a stable value, typically pegged 1:1 to the U.S. dollar. Unlike volatile cryptocurrencies such as Bitcoin, stablecoins act as digital cash, facilitating swift payments, transfers, and value storage without dramatic price fluctuations. Operating on blockchain networks, they facilitate seamless, around-the-clock cross-border transactions, and are backed by reserves like U.S. Treasury bills or cash equivalents, potentially making them a practical tool for both institutional cash management and digital finance innovation."
It continues, "As of Sept. 3, 2025, CoinMarketCap reports that the market leader in stablecoins is Tether (USDT), with over $168 billion in circulation, primarily backed by U.S. Treasuries. The runner-up is Circle's USDC ($72 billion), which prioritizes regulatory compliance and transparency. Ethena's USDe and Dai's DAI occupy third and fourth places, with $12 billion and $5 billion, respectively. Additionally, PayPal's PYUSD coin integrates directly with everyday payment systems. Recent earnings reports from Circle highlight growing adoption, with reserves often allocated to money market funds like BlackRock's Circle Reserve Fund (USDXX), demonstrating stablecoins' shift from crypto periphery to corporate considerations."
Talking about "Stablecoins vs. Traditional Cash" they write, "Compared with traditional cash instruments such as bank deposits, money market funds (MMFs), Treasury bills, commercial paper (CP), and repurchase agreements (repos), stablecoins offer several compelling benefits. They deliver faster settlements, reduced fees for international transfers, and constant accessibility, unbound by banking hours. Additionally, integration with decentralized finance (DeFi) platforms can provide cost efficiencies and higher returns than conventional low-interest deposits. However, new technologies also introduce unique drawbacks, which warrant caution."
