Skip to main content
logo
Log in
Welcome
Log in for exclusive access and a personalised experience
Log in
Hello
  • My Collections
    View saved content and presentation slides
  • Accounts & Documents
    Digital servicing offering for active investors
  • Log out
  • Investment Strategies
    Overview

    Investment Options

    • Alternatives
    • Beta Strategies
    • Equities
    • Fixed Income
    • Global Liquidity
    • Multi-Asset Solutions

    Capabilities & Solutions

    • ETFs
    • Pension Strategy & Analytics
    • Global Insurance Solutions
    • Outsourced CIO
    • Sustainable investing
    • YFYS Investment Analysis & Solutions
  • Insights
    Overview

    Market Insights

    • Market Insights Overview
    • Eye on the Market
    • Guide to the Markets
    • Guide to Alternatives
    • Market Updates
    • Guide to Investing in Asia
    • U.S. Policy Pulse Hub

    Portfolio Insights

    • Portfolio Insights Overview
    • Alternatives
    • Asset Class Views
    • Currency
    • Equity
    • ETF Perspectives
    • Fixed Income
    • Long-Term Capital Market Assumptions
    • Sustainable Investing
    • Strategic Investment Advisory Group

    ETF Insights

    • ETF Insights overview
    • Guide to ETFs
    • ETF Perspectives
  • Resources
    Overview
    • Announcements
    • Center for Investment Excellence Podcasts
    • Library
    • Webcasts
    • Multimedia
    • Morgan Institutional
    • Investment Academy
  • About us
    Overview
    • Spectrum: Our Investment Platform
    • Our Leadership Team
  • Contact Us
  • English
  • Role
  • Country
Hello
  • My Collections
    View saved content and presentation slides
  • Accounts & Documents
    Digital servicing offering for active investors
  • Log out
Log in
Search
Menu
Search
You are about to leave the site Close
J.P. Morgan Asset Management’s website and/or mobile terms, privacy and security policies don't apply to the site or app you're about to visit. Please review its terms, privacy and security policies to see how they apply to you. J.P. Morgan Asset Management isn’t responsible for (and doesn't provide) any products, services or content at this third-party site or app, except for products and services that explicitly carry the J.P. Morgan Asset Management name.
CONTINUE Go Back
  1. Local Government Super

  • LinkedIn Twitter Facebook
Web

Local Government Super

Case study

20/05/2020

Prioritizing cash management at scale, Local Government Super found “operational alpha”

Local Government Super (LGS), a well-established Australian superannuation fund managing over AUD12 billion in retirement savings, recently looked for opportunities to improve its operations to enhance members’ retirement income. As Stuart Hill, Head of Investment Operations, explained, like all superannuation funds, LGS, as an industry leader, is always likely to have large pools of cash available for regulatory and liquidity reasons.

LGS discovered that an AUD liquidity strategy—with same-day access, seamless redemption and diversified counterparty risk—could optimize its surplus cash and help streamline its back office infrastructure, making its idle cash work harder to boost members’ returns. The Covid-19 pandemic and the resulting severe market volatility has resulted in this strategy being even more optimal as superannuation funds are seeing greater demands than ever before, in particular pertaining to member switching and early redemption requests.

The company: Taking a fresh look at operations

Hill’s team had operational complexity and disparate ‘pockets’ of cash to contend with. As a conduit between the ‘front office’ portfolio managers and the custodian, the investment operations team executes investors’ instructions, but wears other hats, as well. It calculates daily net asset value for each member (accounting for new contributions, members who switch investment options, exits, fees, dividends, etc.); projects cash flows and handles currency hedging and securities lending.

The challenge: Achieving better risk-adjusted returns while meeting other needs

From where he sat—where cash management meets liquidity requirements—Hill could see that “lazy cash” was just sitting idly in custody, securities lending, regulatory cash, portfolios and elsewhere. An important consideration was that any solution abide by the Australian Prudential Regulatory Authority (APRA) definition of a cash equivalent product or structure. These characteristics include low volatility and low risk, ensuring liquidity and minimizing the probability of losses. LGS’s investment operations wanted a more active and practical cash management solution that would also strengthen and streamline its complex infrastructure through efficiency in information flow, settlement processes and execution. Investing cash in money market funds could improve risk-adjusted returns on surplus cash. But could LGS generate this so-called “operational alpha” without compromising liquidity, adding risk or creating new operational hassles.

The solution: Balancing return, liquidity and operational ease

Reviewing various solutions available in the market, LGS decided to adopt the J.P. Morgan AUD Liquidity Strategy. It provided what LGS was looking for: a balance among enhanced returns, preservation of capital, suitable levels of daily liquidity and ease to set up and operate. The solution also came from an experienced global asset manager with a proven track record of navigating many market cycles, one that would reduce risk through credit analysis, mitigate interest rate sensitivity, and handle daily investment decision making, whilst complying with APRA’s definitions of cash. The AUD Liquidity Strategy’s online trading platform, MORGAN MONEY, a multi-currency, open architecture trading and risk management system, also offered a real-time view into current balances that Hill found highly intuitive. LGS would also receive around-the-clock client service.

The search for a solution came shortly before the Covid-19 pandemic hit Australia, adding an important additional challenge: Regulators ruled that members of supers who were facing financial hardship must be allowed an early drawdown from their retirement savings of up to AUD10,000. Supers, including LGS, suddenly needed massive additional liquidity, while severe bouts of market volatility were creating liquidity crunches globally.

The benefits

The new cash investment management solution had met all of LGS’s needs:

  • Adequate daily liquidity. A cash equivalent with same-day access was requirement number one.
  • A low-risk, reasonable risk-adjusted return, with security. LGS looks for a better return expectation than their benchmark, and the solution provides the opportunity for a better return on the idle cash.
  • Efficiency and simplicity: The solution was straightforward to set up and operate, requiring no extra headcount. This helps LGS achieve a streamlined, more tech-driven, strategic execution rather than many moving parts; plus LGS does not have to make all the decisions about specific cash investments.

Conclusion

The solution came at the right time, Hill said: “The liquidity challenges that superannuation funds are facing due to the Covid-19 crisis should bring to the top of mind for people in investment operations that how they manage their members’ cash is extremely important.”

0903c02a828d3121

J.P. Morgan Asset Management

  • About us
  • Investment stewardship
  • Privacy policy
  • Cookie policy
  • Complaint Resolution
  • Sitemap
J.P. Morgan

  • J.P. Morgan
  • JPMorgan Chase
  • Chase

READ IMPORTANT LEGAL INFORMATION. CLICK HERE >

The value of investments may go down as well as up and investors may not get back the full amount invested.

Copyright 2025 JPMorgan Chase & Co. All rights reserved.