Global Liquidity Barometer 2022

Short-Term Investment Trends and Treasury Insights

In association with  

The first half of 2022 has been far from plain sailing for CFOs and treasurers, not to mention their short-term investments.

Corporate investors are grappling with everything from interest rate and inflationary pressures to the knock-on effect of the Ukraine crisis, regulatory reform, and growing ESG requirements.

The significant impact of these rapidly evolving market dynamics is reflected clearly in this Global Liquidity Barometer. Providing a real-life lens on these challenges and opportunities, drawing on data collected from the treasury and wider finance community, this survey report offers a means to understand the present – and glimpse the future – of short-term investing.

For example, seven out of ten treasurers are now reconsidering whether US Prime MMFs are the right tools for their needs, in the face of potential regulatory changes. In the same breath, investment policies are also evolving to enable corporates to explore instruments beyond the traditional safe havens of bank deposits and MMFs.

Meanwhile, systems integration is becoming more critical than ever in the short-term investment space. In fact, 77% of respondents would like to access and manage their short-term investments via their TMS, and only 13% want to use a portal. Nevertheless, the findings show that 53% are currently using a portal, for want of better technology.

These clear gaps between short-term investment desires and reality demonstrate a need for treasurers to look beyond their traditional investment partners and technologies towards solutions that help them make smoother and smarter investments, from their system of choice.

There are many other eye-opening statistics in the Barometer results, and we hope you find this report thought-provoking and insightful. We look forward to discussing the findings in more detail with you.

Edward F Lopez
Chef Revenue Officer, Calastone

MACROECONOMICS AND GEOPOLITICS REQUIRE A POLICY REVIEW

Treasurers and CFOs are grappling with one of the most volatile investment environments in recent history – emerging from the Covid-19 pandemic and a period of prolonged low/zero interest rates into a new normal of rising rates, soaring inflation, FX volatility and geopolitical instability. Fifty-four percent of respondents view interest rates as their number one concern relating to short-term investments.

DIGITAL INNOVATION IS REQUIRED TO IMPROVE REAL-TIME ACCESS TO DIVERSE INVESTMENTS

There is a clear lack of user-friendly investment technology among respondents and 47% have no investment portal whatsoever. Meanwhile, over three-quarters (77%) of respondents would prefer to access and manage their MMF and other short-term investments via a TMS, reflecting the desire for a true ‘one stop shop’.

ESG INVESTMENTS MERIT ATTENTION, BUT REQUIRE CAUTION

As ESG filters down from the boardroom to every department within corporate organisations, ESG investments are in the spotlight. The survey results show that 37% plan to invest in green/sustainable deposits over the coming 12 months and 32% are looking to use ESG-compliant MMFs – perhaps eschewing nonsustainable investments in order to favour these emerging instruments.

REGULATION NECESSITATES RETHINKING MMF SUITABILITY

On the back of March 2020 market volatility and subsequent runs on MMFs, regulators in the US and Europe are looking to reform MMF regulation. While the intention is to make funds more secure for investors, the unintended consequences of these reforms are a significant concern and may see treasurers no longer choosing to invest in MMFs, or at least certain types of funds.