February 09, 2011
Yield Quest
Investment managers combat low yields
When members of The NeuGroup’s Treasury Investment Managers’ Peer Group met in the fall of 2010, they grappled with the challenges of a continuing low-yield environment, growing cash piles and improved profits. Topics included:
1) Economic Outlook and Portfolio Strategy. A discussion of the high points of the economy, interest rates, and the impact of financial reform measures to date.
Key Takeaway: The US economic recovery will be slow as the country deleverages. Most inputs into GDP growth are negative, with the notable exception of corporate investment levels.
2) Analytical Metrics for Portfolio Evaluation. How total-return measurement can more accurately reflect the condition of portfolios that appear to be struggling.
Key Takeaway: Most measures require an educational campaign on the part of treasury, as many in senior management do not have a background in analytics.
3) High-Yield Portfolio Management. A discussion on having relatively liberal amounts of bank loans and high-yield in the portfolio.
Key Takeaway: Everyone needs to be on board about what to do when high yield hits a certain level of volatility or other threshold.
4) Building a Portfolio Management Program. A discussion of the process of building a portfolio management infrastructure from the ground up.
Key Takeaway: In a search for long-term growth, one member firm comes out of the gate taking on more risk than many other companies.
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