In the spring of 2008, FMC moved pension fund cash from regular money market funds to “safe” ones that invested in government securities because “there really weren't any seats left in the lifeboats,” Mr. Deas said.
“We took the same decision for corporate cash.” That still holds today. “We believe that diversification, having that range of maturities, provides safety for us,” he said.
For state treasurers, options are particularly limited, by statutes that set policies for cash management. “The most important thing is always protecting public funds,” said Kevin Johnson, communications director for the National Association of State Treasurers, Lexington, Ky. “The priorities are safety, then liquidity, then yield.”
Tom Dresslar, spokes-man for California Treasurer Bill Lockyer, noted that in 2007, “we made a clear decision to solidify liquidity and safety” by boosting allocations to Treasuries from 3.5% at the time to the 57.72% of roughly $65 billion in assets that it is now. “We plan to stay the course.”
The same is true for Florida, which has 65% of its $20.6 billion Treasury Investment Pool in Treasuries and related obligations. “We do not anticipate changes in our cash management strategy,” said Anna Alexopoulos, spokeswoman for Chief Financial Officer Jeff Atwater.
Corporate treasurers historically have had a significant portion of their cash investments in U.S. Treasuries. Five of the most cash-rich companies in the Russell 3000 had 44.85%, or $76 billion, of their cash pools invested in U.S. government securities.
Some companies were shifting toward bank deposits earlier this year, “but we're seeing a shift back into Treasuries now,” said Tom Hunt, director of treasury services for the Association for Financial Professionals in Bethesda, Md. “It's been kind of a whipsaw.”
In a direct reversal from a July survey of financial professionals that found 20% of them shed some holdings during the debt ceiling debate, an AFP survey earlier this month found few companies planning any changes to their short-term investment strategy following the S&P downgrade of the U.S. government's credit rating. Only 5% of companies were shedding some Treasury holdings and another 15% were simply not planning to add to their holdings.