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Payden & Rygel Global has launched three enhanced cash liquidity funds denominated in sterling, euros and US dollars that are designed to offer investors attractive yields in excess of deposit or money market rates along with capital stability and liquidity.
The firm says the funds have been established in response to demand from clients as well as in anticipation of a broader trend among institutions to polarise their asset allocation between highly liquid and secure cash-like investments at one end of the spectrum and allocations to private equity, hedge funds and other alternative assets at the other. In some cases, the cash holdings may be pledged as security or collateral for these investments.
'A significant trend is emerging among institutions that want to increase their financial flexibility by building liquidity as a strategic asset class, while maintaining their maximum risk allocation by using cash as collateral to secure investments in other asset classes,' says Payden & Rygel managing principal Robin Creswell.
The asset manager has offered short-duration strategies to investors for more than 20 years and has more than USD25bn under management in these strategies in segregated accounts and funds.
'These three funds build on our historic leadership in global liquidity and short-term fixed income management,' Creswell says. 'Through the funds, we expect to provide investors with a low risk alternative to traditional stock and bond investments - and a higher returning alternative to money-market funds or bank deposit accounts.'
The new funds invest in a broad spectrum of short-term fixed-income assets, including commercial paper, certificates of deposit, corporate floating rate notes, asset-backed floating rate notes, short-dated and fixed corporate notes and fixed deposits. They will be diversified across many different issuers to minimise single credit risk.
Payden & Rygel's enhanced cash management philosophy emphasises short maturities, broad diversification and active management to generate incremental returns with no major increase in risk or volatility over traditional money-market products and to maintain an average credit rating of AA/AAA. The firm says its short-term investment strategy has significantly outperformed alternative investments since its launch almost 25 years ago.
Payden & Rygel Global was established in London in 1999 and manages more than USD12bn in a broad array of equity and fixed-income strategies. The firm serves institutional clients in the UK, continental Europe and the Middle East including banks, supranationals, government institutions, pension funds, insurers, foundations and public funds. The London firm is a subsidiary of Los Angeles-based Payden & Rygel, one of the largest privately-owned global investment managers with more than USD50bn in assets under management and offices in Dublin, Frankfurt and Hong Kong.
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