Northern Trust white paper urges investors to act now on liquidity management


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 offers little in return.

Since the 2008 global financial crisis, liquidity’s growing pains have become an increasingly critical issue for institutional investors, insurers and asset managers. A difficult 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 find 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 effectively manage their liquidity requirements in this difficult 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 efficiency. Before that is possible, investors must develop a comprehensive understanding of the liquidity picture and the factors involved.

The white paper is available here.

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