Below, we excerpt from our most recent Money Fund Intelligence "Profile." The latest is entitled, "Treasury Partners' Klein on Portals, Separate Accounts." It says: This month, we interview Jerry Klein, Managing Director/Partner of Treasury Partners, and discuss the online money market fund trading portal business, as well as recent trends in separately managed accounts and cash investing. Our Q&A follows. (Note: Crane Data hosts its 4th annual Money Fund University "basic training" conference starting today and running through Friday at the Providence Renaissance Hotel. See www.moneyfunduniversity.com for details; registrations are still being accepted.)
MFI: How long have you been involved with money funds? Klein: Richard Saperstein, Treasury Partners CIO, has been involved in the money markets since the 1980s. That's when he established and ran the Corporate Cash Management Group at Oppenheimer & Company. I joined him there in 1996. At the time, we were primarily focused on separately managed corporate accounts. In the '90s, many small- to mid-cap publicly traded companies were raising large stockpiles of cash, but didn't have the internal resources, meaning treasury departments, to manage that cash. So, Richard assembled a team and launched a platform that enabled companies to fully outsource their cash management requirements by providing investment policy compliance, credit monitoring and analysis, portfolio management, and FASB 115 reporting.
In addition to separately managed portfolios, we've always offered money market funds as an investment option for clients who want to maintain a liquid balance. In 2003, we joined Bear Stearns and built the Bear Stearns money market portal from scratch. After J.P. Morgan acquired Bear in 2008, we decided to spin out and regrouped under a new name, Treasury Partners, in early 2009.
MFI: How many funds are on your portal? Klein: We offer our Portal clients access to approximately 25 fund families representing 150 funds. Although we work primarily with publicly traded companies headquartered in the U.S., many of these clients have offshore subsidiaries that require multiple currencies, so funds are denominated in US Dollar, Euro, GBP, Canadian Dollar, Aussie, and Yen. The number of funds on the Portal has actually decreased slightly over the past five or six years as a result of consolidation in the industry.
MFI: What's the biggest challenge in getting investors onto the portal? Klein: Clearly, the biggest challenge is the interest rate environment. Understandably, when yields on money market funds are in the 0% range, corporate treasurers are spending appreciably less time on fixed income investments. MFI: What types of investors are the biggest users? Klein: We work primarily with corporations, but our client base also includes other types of investors, such as municipalities, hedge funds, and universities.
MFI: What are you working on now? Klein: Actually, we were quite busy during 2013 from a development standpoint. This past summer, we rolled out a mobile platform that enables clients to enter trades from their smart phones. And, clients who want to trade in a dual-user mode, can approve trades from their phones. We included this feature for clients who often had difficulty tracking down "approvers" as deadlines were approaching. Now, with the dual-user mode, senior people in the treasury department can approve a trade instantly, regardless of where they are or whatever else they might be involved in at the time.
We've also been working on a very significant upgrade to our investment policy compliance system, and we anticipate going live with this upgrade later this month. Among the new system's extensive capabilities, it will allow clients to run compliance rules down to the CUSIP-level holdings within the funds. For example, if a client has exposure to Citibank in a bank deposit, they may want to limit that exposure within their investment portfolio. So they'll be able to program a predetermined limit and, when they enter orders to purchase, let's say, a BlackRock or Goldman Sachs fund, the system will check the holdings in those funds and either allow the trade to go through or block it based on the underlying Citibank exposure. They can enter in similar restrictions on country exposures, asset classes, and other characteristics of money market funds. Ultimately, it will give our Portal clients much greater control over how their cash is actually invested within the funds.
