BOSTON--(BUSINESS WIRE)--Capital Advisors Group today announced it will offer a new short-term cash investment vehicle – Capital Advisors Group Liquidity Accounts™– for investors considering alternatives to institutional prime money market funds.
Designed to provide safety of principal, short-term liquidity, and control through portfolios of directly owned securities, Capital Advisors Group Liquidity Accounts™ are a response to SEC regulations that will change the risk and liquidity profiles of institutional prime money funds starting in October 2016.
“We are entering a new era in cash management,” said Ben Campbell, CEO of the Boston-based investment advisory firm. “Capital Advisors Group Liquidity Accounts™ will help meet the emerging need for innovative cash and cash-equivalent investment vehicles that provide the safety, liquidity, transparency and control that corporate treasuries require.”
The new SEC rules will fundamentally change prime money funds by instituting floating net asset values (NAVs), meaning investors can no longer always be certain that the traditional fixed price of $1/share will be maintained in times of economic stress. Other changes – including possible imposition of redemption fees and liquidity gates when a fund’s liquid balances fall below certain thresholds – will have the potential to limit investors’ immediate access to cash as well.
Unlike money market funds, where investors own shares of pooled assets, Capital Advisors Group Liquidity Accounts™ are portfolios of investments owned directly by the client and managed by Capital Advisors Group. Client ownership and control mitigates the commingled shareholder liquidity risk associated with institutional prime money funds. An investment policy specifying eligible investments and minimum overnight and seven-day liquidity targets helps to provide safety of principal with access to cash.
Capital Advisors Group will introduce the first product in its new Liquidity Accounts™ family, a 90-Day Liquidity Account™, in November 2015. A buy-and-hold separate-account portfolio of highly rated U.S. dollar-denominated money market instruments, the 90-Day Liquidity Account™ will feature 90-day maximum maturity and 35-day target weighted average maturity of holdings, with minimums of 10 percent of holdings available for overnight cash redemption and 30 percent available in seven days.
“Our 90-Day Liquidity Account™ will be an easy, attractive option for institutional investors ready to evaluate alternatives to prime money funds and traditional bank deposits,” Campbell said. “Clients may also benefit from our proven research, trading, and credit management teams who provide transparent portfolio management, online access to account holdings and seamless monthly accounting reports.”
About Capital Advisors Group
With more than $10 billion under management, Capital Advisors Group, Inc. is a leading independent investment advisor specializing in institutional cash investments and risk management, with a reputation built upon deep, research-driven investment strategies and solutions for its clientele.
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