NEW YORK (HedgeWorld.com)–Faced with continuing low interest rates, players in the hedge fund industry have become more focused on trying to improve earnings on their cash balances.
Money market mutual fund returns have fallen drastically in recent years and assets in these funds have shrunk. In addition to the challenge posed by near-bottom rates, market opportunities are not as strong as they have been. Investors who previously did not pay much attention to cash are concerned.
“People are seriously looking at alternatives to the money markets,” says Annette Cazenave of Horizon Cash Management in Chicago, an active cash manager with more than US$1.4 billion in assets. “We’ve been getting calls from new segments within the market space. What was a non-priority before has become a priority.”
Earlier this year, funds of funds started inquiring about cash management. Fund of funds can hold substantial balances that they haven’t yet committed or are keeping as a cushion to meet withdrawals and other demands.