Northern Trust white paper: Cash: An Asset in Adolescence

If the investment industry has a rebellious teenager in the house today, that teenager would be cash: it costs you more, is more challenging and o ers little in return.

Since the 2008 global nancial crisis, liquidity’s growing pains have become an increasingly critical issue for institutional investors, insurers and asset managers. A di cult mix of market trends, a sustained low interest rate environment and the unintended consequences of a variety of market regulations have all contributed to make cash an increasingly problematic and high-maintenance asset class. Whether investors are seeking to obtain a return on un-invested cash or nd liquidity to support investment strategies, they face an array of challenges that have continued to grow in complexity. How can investors and their asset managers e ectively manage their liquidity requirements in this di cult environment?

While there is no magical solution for overcoming the liquidity conundrum, investors can take steps to “future-proof” their investment policies to ensure a balance of security, liquidity, yield and operating e ciency. Before that is possible, investors must develop a comprehensive understanding of the liquidity picture and the factors involved.

The full white paper is available at

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