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    1. Evaluating Risk - Global Liquidity Investment Academy

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    2. Evaluating and managing risks

    • Investment Academy Hub
    • 1. Choosing a liquidity investment
    • 2. Evaluating and managing risks
    • 3. Regulation and liquidity fund due diligence

    Liquidity products are low risk, but not zero risk

    Liquidity products are designed to be among the least risky of all investment choices — after all, their primary purpose is to preserve capital and remain highly liquid.

    However, while volatility should be significantly lower than in most bond or equity funds, money market funds and other liquidity products are still subject to inherent market and investment risks. 

    Risks and fund ratings

    Understanding risk is crucial for investors to be able to choose the most effective solution for their cash portfolios. Fund ratings are a vital first step to assessing a fund’s risk profile, while liquidity fund managers with proprietary credit research resources can provide an extra layer of credit risk management. 

    Money market fund risks

    Because they invest in fixed income securities, money market funds and ultra-short duration funds are subject to interest rate risk, liquidity risk and credit risk.

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    External fund ratings

    External fund ratings can help investors assess a money market fund’s risk profile, while internal credit ratings can be vital to manage credit risk.

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    3. Regulation and due diligence

    Help is on hand from regulators, who play an increasingly important role in defining cash investment instruments and structures. Nevertheless, due diligence is still vital if cash investors are to seek out the most effective cash investments for their own needs and circumstances

    Discover more
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