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The BlackRock ICS Ultra Short Bond Funds (USBF) are managed as part of our ICS Money Market Fund range and are defined by ESMA as Standard VNAV funds. This is a reflection of our safety first approach and in response to demand from clients for a low volatility, enhanced cash plus strategy to enable strategic portioning of cash.

Cash remains attractive amid a potential shift in rates. Money market funds will typically position their duration a little longer heading into a rate cut environment and will tend to outperform alternatives for overnight liquidity as a result.

While there are various fund structures available at BlackRock, the following paper outlines the similarities and limited differences between two short-term money market fund structures offered under BlackRock’s Institutional Cash Series (ICS) fund range.

After a sustained period of rising interest rates, we've reached a juncture where rates are at their peak, often referred to as “Terminal Rates.” This, combined with events in the first quarter of 2023, further reinforces the value of diversification in cash investing.

Our liquidity strategies are specifically designed to meet the cash management needs of institutional investors. They satisfy the most conservative investment policies by consistently focusing on high-quality investments and providing same-day liquidity with competitive yields.

With expectations of central banks lowering rates this year, we see an opportunity for investors to actively manage their operational, core and strategic cash balances in an environment still rife with economic risks and uncertainty.

Liquidity fees and gates (“fees and gates”) remain mechanisms that may be incorporated to help ensure fair treatment towards all money market fund (“MMF”) investors in times of uncertainty.

Low Volatility Net Asset Value (LVNAV) money market funds (MMFs) were introduced in 2019 under European Money Market Fund Reform. This fund type replaced the previous Constant Net Asset Value (CNAV) prime funds, whilst maintaining most of their administrative utility.

The current interest rate climate poses opportunities as well as challenges for cash investors. It’s important to understand how to optimise cash allocations based on liquidity demands, intended investment horizons and appetite for flexing the risk return profile of cash investments.

In today’s complex and fast-changing markets, prudent risk management is more important than ever, including understanding the source of investment risk and ensuring it is appropriate for each portfolio.