Treasury managers have implemented 3 key processes (with varying degrees of complexity and sophistication) that allow them to enhance their funds’ liquidity in times of stress.
Hedge Fund treasury management has traditionally been an operations function, focused on cash management. The majority of funds have seen little reason to invest in optimising their treasury function as most are cash rich and have been posting little margin relative to their overall equity – in some cases lower than 30%.
However, over the last decade, so-called ‘active treasury management’ has been pioneered by a handful of the top fixed income funds.
These funds are generating between 30 and 85 bps of additional return directly from treasury activities.
- How does Treasury drive alpha?
- Unencumbered cash management
- Encumbered cash management:
- Margin Optimisation
- Collateral Optimisation
- Liquidity Management
- How does Treasury enhance funds’ liquidity?