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OCTOBER 31, 2020, 8:04 AM Exclusive: Goldman money funds' liquidity buffer swells before U.S. election Tim McLaughlin BOSTON (Reuters)
السبت 31 أكتوبر 2020 - 12:09
OCTOBER 31, 2020, 8:04 AM
Exclusive: Goldman money funds' liquidity buffer swells before U.S. election
Tim McLaughlin
BOSTON (Reuters) - Two Goldman Sachs Group Inc money-market funds, whipsawed in March by billions of dollars of investor withdrawals, have steadily amassed a liquidity cushion much larger than rivals, as the $4.35 trillion industry braces for the outcome of the U.S. presidential election and another global surge in coronavirus cases.
FILE PHOTO: A sign is displayed in the reception of Goldman Sachs in Sydney, Australia, May 18, 2016. REUTERS/David Gray/File Photo
The funds’ weekly liquidity - a barometer of how quickly investments can convert to cash in a week - rose to 85% of total assets this week, according to disclosures here by the bank. That is about double the level when Goldman Sachs in March injected nearly $2 billion of the bank’s own capital into the funds to prevent them from falling below the regulatory weekly liquidity threshold of 30%.
“We actively manage liquidity in our funds as dictated by the market environment,” Goldman said in an email statement.
Average weekly liquidity at about 111 U.S. prime institutional money-market funds, like the Goldman funds, was 66% at the end of September, up from 54% in the year-ago period, a Reuters analysis of U.S. regulatory filings show. Those 111 funds hold about $300 billion in assets, or 9% of the $4.35 trillion in money funds.
Although they are among the tamest investment vehicles, prime funds can be riskier than money-market portfolios that primarily hold U.S. government bonds. The upside is they may offer more yield from holding short-term debt issued by an array of top-rated global banks, for example.
Despite regulatory efforts to make institutional prime money-market funds more resilient in times of stress, they remain vulnerable to massive withdrawals, especially by clients who need cash immediately to meet their own obligations. A U.S. official recently warned that decade-old reforms to the industry may not be enough to avert major outflows during a future crisis.
Exclusive: Goldman money funds' liquidity buffer swells before U.S. election
Tim McLaughlin
BOSTON (Reuters) - Two Goldman Sachs Group Inc money-market funds, whipsawed in March by billions of dollars of investor withdrawals, have steadily amassed a liquidity cushion much larger than rivals, as the $4.35 trillion industry braces for the outcome of the U.S. presidential election and another global surge in coronavirus cases.
FILE PHOTO: A sign is displayed in the reception of Goldman Sachs in Sydney, Australia, May 18, 2016. REUTERS/David Gray/File Photo
The funds’ weekly liquidity - a barometer of how quickly investments can convert to cash in a week - rose to 85% of total assets this week, according to disclosures here by the bank. That is about double the level when Goldman Sachs in March injected nearly $2 billion of the bank’s own capital into the funds to prevent them from falling below the regulatory weekly liquidity threshold of 30%.
“We actively manage liquidity in our funds as dictated by the market environment,” Goldman said in an email statement.
Average weekly liquidity at about 111 U.S. prime institutional money-market funds, like the Goldman funds, was 66% at the end of September, up from 54% in the year-ago period, a Reuters analysis of U.S. regulatory filings show. Those 111 funds hold about $300 billion in assets, or 9% of the $4.35 trillion in money funds.
Although they are among the tamest investment vehicles, prime funds can be riskier than money-market portfolios that primarily hold U.S. government bonds. The upside is they may offer more yield from holding short-term debt issued by an array of top-rated global banks, for example.
Despite regulatory efforts to make institutional prime money-market funds more resilient in times of stress, they remain vulnerable to massive withdrawals, especially by clients who need cash immediately to meet their own obligations. A U.S. official recently warned that decade-old reforms to the industry may not be enough to avert major outflows during a future crisis.
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