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THE BID

Falling for cash

As interest rates decline, investors are reassessing their cash portfolios and considering the impact of monetary policy shifts over the next 12 months. Beccy Milchem, Global Head of Cash Distribution at BlackRock, emphasizes the importance of actively managing cash and shares insights on the benefits of putting cash to work globally.

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Falling for cash
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Resilience and returns in a shifting landscape

The 2024 macroeconomic landscape has been marked by declining inflation, easing recession fears, and the increasing likelihood of soft landings in several regions.
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[00:00:06.24] In the current economic environment, which is characterized by potential rate cuts, interest rates remain relatively high and we believe there are opportunities for money market fund investors.

[00:00:15.92] When rate cuts are priced into the market and there is an inverted yield curve, active short duration positioning can help ensure that money market funds continue to offer competitive risk-adjusted returns.

[00:00:27.44] Additionally, monetary policy loosening may lead to increased liquidity in the financial system, which typically creates ample supply of high-quality short-term securities.

[00:00:39.92] During periods of economic volatility, we believe that active cash management is critical to clients overall investment strategy.

[00:00:48.28] All investors have a cash need.

[00:00:50.68] It is important to effectively manage liquidity across different rate cycles to take advantage of same-day liquidity, diversification, operational ease and active duration management.

[00:01:01.84] Money market funds invest in high quality debt securities, which provide relatively stable and low risk opportunities to earn returns on cash reserves.

[00:01:11.32] Although rate cuts might lower the yields on short term investments, money market funds hold a mix of securities with varying maturities.

[00:01:19.72] Their ability to blend shorter and slightly longer dated securities can help balance yield and risk, and adapt to changes in the interest rate environment with more flexibility.

[00:01:30.20] Money market funds generally closely reflect central bank rate changes due to their direct investment in short term securities.

[00:01:36.96] However, a lag often exists between rate cuts and the decline in money market fund yields due to the mix of maturities in their portfolios as securities mature and are replaced by lower yielding ones, money market fund yields adjust over time.

[00:01:52.72] As the broader economic environment evolves, clients should review their specific goals and investment time horizons, and seek money market investments that provide liquidity, stability, and opportunity for yield.

[00:02:02.16] that provide liquidity, stability, and opportunity for yield.

[00:02:04.48] These qualities may help to optimize cash returns and build more resilient portfolios to more effectively navigate market fluctuations.

Liquidity in the wake of falling rates

In the current economic environment, which is characterized by potential rate cuts, interest rates remain relatively high, and we believe there are opportunities for money market fund investors.

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00:00:00:21 - 00:00:02:17 Dynamic markets require

00:00:02:17 - 00:00:04:11 dynamic technology.

00:00:04:11 - 00:00:05:12 That's why

00:00:05:12 - 00:00:06:23 BlackRock Cachematrix

00:00:06:23 - 00:00:08:02 is constantly evolving

00:00:08:02 - 00:00:09:02 to help you

00:00:09:02 - 00:00:12:00 manage cash better and faster.

00:00:12:00 - 00:00:13:25 Our liquidity platform is built

00:00:13:25 - 00:00:15:26 around operational efficiency,

00:00:15:26 - 00:00:16:10 offering

00:00:16:10 - 00:00:17:21 configurable tools for

00:00:17:21 - 00:00:20:07 end-to-end cash management.

00:00:20:07 - 00:00:21:28 From initiating trades,

00:00:21:28 - 00:00:23:09 streamlining settlement

00:00:23:09 - 00:00:24:29 and producing reports,

00:00:24:29 - 00:00:26:17 you need a convenient platform

00:00:26:17 - 00:00:29:10 to manage money market fund investments.

00:00:29:10 - 00:00:31:15 More function, less friction.

00:00:31:15 - 00:00:34:05 BlackRock Cachematrix gets it.

00:00:34:05 - 00:00:36:06 BlackRock Cachematrix is guided

00:00:36:06 - 00:00:39:22 by three foundational pillars: innovation,

00:00:39:25 - 00:00:42:11 integration and impact.

00:00:42:11 - 00:00:44:22 Powered by decades of financial service

00:00:44:22 - 00:00:45:27 knowledge and technology

00:00:45:27 - 00:00:48:14 expertise, our functionality features

00:00:48:14 - 00:00:49:24 sophisticated investment

00:00:49:24 - 00:00:51:14 tools and analytics.

00:00:51:14 - 00:00:53:13 Delivering the relentless innovation

00:00:53:13 - 00:00:54:22 and global client support

00:00:54:22 - 00:00:56:03 you need to help you

00:00:56:03 - 00:00:57:07 confidently navigate

00:00:57:07 - 00:00:59:27 changing market conditions.

00:00:59:27 - 00:01:02:05 BlackRock Cachematrix meets you

00:01:02:05 - 00:01:03:09 where you are,

00:01:03:09 - 00:01:05:19 integrating with existing tools

00:01:05:19 - 00:01:06:17 to empower you

00:01:06:17 - 00:01:07:24 to streamline your time

00:01:07:24 - 00:01:09:18 spent managing cash.

00:01:09:18 - 00:01:11:10 With BlackRock Cachematrix,

00:01:11:10 - 00:01:12:27 you can view and trade accounts

00:01:12:27 - 00:01:15:16 across entire portfolios,

00:01:15:16 - 00:01:18:14 conduct in-depth risk analysis,

00:01:18:14 - 00:01:21:20 compare available investment options,

00:01:21:22 - 00:01:22:13 and leverage

00:01:22:13 - 00:01:25:13 multiple reporting interfaces.

00:01:25:13 - 00:01:27:00 With BlackRock Cachematrix,

00:01:27:00 - 00:01:28:06 you also benefit

00:01:28:06 - 00:01:29:15 from the impact of our

00:01:29:15 - 00:01:31:28 global ecosystem–one of the largest

00:01:31:28 - 00:01:34:15 liquidity portal providers.

00:01:34:15 - 00:01:36:20 Our diverse client base provides

00:01:36:20 - 00:01:38:04 unique insights,

00:01:38:04 - 00:01:40:09 helping us to continually enhance

00:01:40:09 - 00:01:42:12 and evolve our solutions.

00:01:42:12 - 00:01:44:27 We are always reimagining ways

00:01:44:27 - 00:01:46:23 to simplify cash management.

00:01:47:01 - 00:01:49:16 Reimagine how you manage cash

00:01:49:16 - 00:01:51:14 with BlackRock Cachematrix.

Let's tech about the future of cash management

Dynamic markets require dynamic technology. That's why BlackRock® Cachematrix™ is constantly evolving to help you manage cash better and faster.