For 50 years, money market funds (also known as liquidity funds) have been providing institutional cash investors and treasury professionals with attractive levels of security, liquidity and yield compared to conventional deposits or direct investments in money market securities. However, building a robust liquidity investment strategy requires a thorough understanding of the structure of money market funds, as well as the interest rate, liquidity and credit risks that they are subject to.

It’s also crucial that investors understand the fundamental characteristics of different money market fund options, and that they are able to implement a cash segmentation strategy that is needed to employ step-out strategies, such as ultra-short duration bond funds, as part of an optimised cash portfolio solution.