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ICD Guides NeuGroup Members Assessing Risks and Rewards in Money Markets

By September 17, 2020 No Comments

Cash investment managers compare notes on money funds, deposits, risk and more in a virtual interactive session.

Treasury investment managers attending a NeuGroup virtual interactive session (VIS) this week heard timely analysis from sponsor ICD about the ups and downs in money markets over the last six months as the pandemic took hold.

  • They also got the valuable and prized chance to learn what moves other managers are making—or not making—as they weigh the risks and rewards of taking advantage of opportunities.

ICD’s Justin Brimfield helped kick off the meeting by describing “three stages of grief” money markets have experienced, going from an initial phase of “shock and awe,” to a coping phase and finally, a period of seeking new opportunities.

  • A quick introductory poll helped take the temperature of the room, allowing members to get a grasp on where other attendees stand in terms of their own “grief” process.

In the first half of the session, ICD offered insights on how members might enhance current practices in weighing the relative risk of investment options, describing an efficient frontier model the company created.

  • A NeuGroup member who is also an ICD client added some color by describing a simple calculation that led to his company investing in prime funds for the first time, to take advantage of a market opportunity.
  • One of the ICD presenters said there is definitely a focus among clients on understanding investments, with many doing research into the historical NAVs and liquidity levels of prime funds.
  • “There’s definitely the need for our contacts to dig deeper and look at, in some cases, investments alternatives as well,” he said.

After the initial presentation, NeuGroup members convened in breakout groups of around 10 members. Familiarity and experience with the NeuGroup Process and the interactive session format allowed members to quickly dive into discussion.

  • Members discussed a range of topics, including risk tolerance, counterparties, tenor and the benefits and frustrations of technology. They then reconvened and shared the key takeaways from each breakout group.
  • One group discussed considering banks outside of a company’s credit facility to overcome limits on counterparty risk.
  • One manager, attending his first NeuGroup meeting, got new insight on his company’s risk appetite compared to peers. “We are incredibly conservative,” he said.
  • In a bonus session, members had the opportunity to see a preview demo of ICD’s updated portal ahead of its debut the next day.

Visit NeuGroup Insights to learn more about money markets, efficient frontier analysis and more.

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Justin Jones

Author Justin Jones

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