Are You Optimizing Your Cash?

As organizations grow and needs become more complex, cash and liquidity management are often overlooked. Partnering with an experienced active asset manager can help organizations navigate market alternatives & optimize cash holdings.

Table of Content

Overview

Increased investment income may be realized by organizations through tailored cash management that incorporates a segmentation framework.
Liquidity and safety of principal are paramount when managing cash.
Understanding cash segmentation can help organizations properly balance risk, return, and liquidity.
Active cash management requires effective and regular communication with clients, a core tenet of Fort Washington’s approach to cash management.

Active Management of Cash Holdings

Many organizations—universities, health care institutions, non-profits—are not optimizing their cash balances and are failing to benefit from additional income that may be earned with a cash segmentation strategy. As organizations grow and needs become more complex, cash and liquidity management are often overlooked.

Partnering with an experienced active asset manager can help organizations navigate market alternatives and optimize cash holdings.

Using current yield levels for various cash instruments, we have demonstrated how a basic cash segmentation strategy could result in additional interest income in the following example:

Hypothetical as of July 2024

Source: Fort Washington. The above hypothetical is being presented for illustrative purposes only and represents an example of cash management strategies and allocations. Actual allocations, yield, and income will be different from those shown, depending on current market and economic conditions, and client-specific needs. Yield shown do not reflect a single source but was approximated using a variety of average yield calculations and representative portfolio holdings as of July 2024. Income shown does not take into consideration any account fees and expenses that may be incurred with the management of a similar strategy. Past performance is not indicative of future results.

A Stair-Step Approach to Cash Segmentation

Cash segmentation involves dividing cash holdings into different segments based on their intended use and time horizon. In this example, we show three typical segments of cash, each with their own unique objective: Operating Cash, Tactical Cash, & Strategic Cash.

A tailored liquidity management solution that incorporates active investment management can optimize each segment by stepping up and down the return-risk spectrum of short-term market instruments.

Source: Fort Washington. There is no guarantee that investing will yield similar results; investing involves risks, including the potential loss of principal. Past performance is not indicative of future results. ABCP: Asset-Backed Commercial Paper; ABS: Asset-Backed Security; CP: Commercial Paper; FRN: Floating-Rate Note; MBS: Mortgage-Backed Security; Repo: Repurchase Agreement; VRDN: Variable Rate Demand Note.

Partnering With Clients

Each investor's needs and objectives are unique. A prudent investor understands all investment objectives, keeps current with the market environment, and stays abreast of dynamic and changing investment options. By having a thorough understanding of a client’s liquidity needs and properly segmenting cash, significant value may be added through a tailored cash management solution.

A core tenet of Fort Washington's approach to cash management is effective and regular communication with clients. This allows us to gain a thorough understanding of clients' cash needs and how these needs may change on a real-time basis. We work to go beyond what is typically expected of investment managers to help organizations realize the benefits of a tailored cash segmentation solution.

Learn More About How Fort Washington Can Help

By leveraging Fort Washington’s deep organizational experience, clients can spend less time worrying about cash balances and devote more time to managing their business and critical projects.

Cash Management Solutions

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IMPORTANT DISCLOSURES

Past performance is not indicative of future results. This publication contains the current opinions of Fort Washington Investment Advisors, Inc. Such opinions are subject to change without notice. This publication has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy, or investment product. Information and statistics contained herein have been obtained from sources believed to be reliable and are accurate to the best of our knowledge. No part of this publication may be reproduced in any form, or referred to in any other publication, without express written permission of Fort Washington Investment Advisors, Inc.

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