In the latest issue of our monthly Money Fund Intelligence newsletter ($500 a year), we profiled the Milwaukee, Wisconsin team responsible for the $7.5 billion Marshall Money Market Funds, run by M&I Investment Management Corp. We spoke with Rich Rokus, Vice-President and Portfolio Manager of the Marshall Prime and Marshall Government Money Market Funds, and Craig Mauerman, Vice-President and Portfolio Manager of Marshall Tax-Exempt Money Market. In excerpts below, we discuss the fund manager's investment strategies, as well as recent market events.
When asked, "What is the biggest challenge in managing a money fund?" Rokus responds, "Our focus has always been trying to provide the highest yield possible while reigning in risk. Anybody in this business can just get out there and add yield to a portfolio, that's not too difficult. But doing so in a manner that's cautious and prudent is a completely different thing. So you have to find out where that fine line is -- where you can reach for a little yield and where you think the danger lies and try to avoid it."
Mauerman tells us, "In the past year and a half, the biggest challenge has been avoiding those that were either on the ropes or facing severe downgrades. Ordinarily, we spend our time on a combination of cash management and deal flow management, making sure we have cash at the right times when deals are available."
The Marshall Funds were good in avoiding the troubled names of the past two years. Rokus says, "We never had extendibles because we believe we should be in control of our duration management. We did own a few select SIVs for years, but it really wasn't a big focus for us. We certainly had no appetite for the newer, less diversified ones."
He says, "Our investment process begins with the recognition that we have the luxury of a diversified, stable base of assets. The condition allowed us to reduce exposures in the commercial paper market and replace it with floaters. So we really never got into the whole ABCP market too extensively. Historically, we would run 25% or less in CP, so we were able to avoid a lot of the SIV structures. The quality, short-duration exposures we had rolled off quickly."
Finally, Rokus says, "Our thought process all along was to add value by not stretching too far. I think a number of newer members to the industry have now had a lifetime learning experience on the dangers of reaching too far for yield. Success this past year has been measured by no support actions. Success in the past was providing a decent yield. We have been very pleased to deliver both."
Contact Crane Data to request the full interview or to subscribe to Money Fund Intelligence, and watch for more excerpts from the Marshall Funds interview in coming days.
