Chicago-based Treasury Strategies Inc. is preparing to release the results of a recent flash survey of 135 corporate treasurers and their liquidity investment practices. The responses show that large investors have shifted their cash portfolios dramatically from active management to passive management over the past six months. TSI's statistics show money market mutual funds and bank demand deposit and sweep accounts as huge winners in the ongoing market turmoil, while CP, enhanced cash, notes & bonds, ARS, and even repo and term deposits all declined dramatically. From July 1, 2007, through Jan. 1, 2008, the percent using money funds inched up from 78 to 79%, but the balances grew by a massive $514 billion, or 32%, from $1.622 to $2.136 trillion, projects TSI.

Bank deposits and sweep accounts combined grew even faster, rising from $782 billion to $1.061 trillion, a gain of 36%. Money funds now account for a record 40.7% of corporate liquidity holdings vs. 29.5% as of mid-year 2007. Bank deposits & sweeps account for 20.2% vs. 14.2%. TSI's Tony Carfang tells us that the overall level of corporate liquidity fell by $250 billion to $5.25 trillion, and that the shifts are unprecedented. The study also shows that corporate holdings of enhanced cash funds and auction rate securities, both of which had been minor holdings even before their troubles, unsurpringly registered declines.

The Investment Company Institute's weekly statistics and Crane Data's calculations show money market mutual fund assets rising by over $1 trillion the past 52 weeks and rising by $868 billion since mid-2007. The Federal Reserve's money supply numbers show bank savings deposits growing by $108.9 billion since July 2, 2007, from $3.844 trillion to $3.953 trillion, or 3%. Over 52 weeks, bank deposits (as measured by the Fed) grew by $209.4 billion. Look for more survey results from Treasury Strategies as they release their full results in coming days, and look for the full tables and discussion in the March issue of Money Fund Intelligence.

Email This Article

Use a comma or a semicolon to separate

captcha image