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    Our thought leaders discuss the impact of global reform on liquidity investments.

    Liquidity Solutions

     / 
    REGULATORY REFORM 1 of 3
    INVESTORS MUST CHOOSE 2 of 3
    WHY GSAM LIQUIDITY SOLUTIONS? 3 of 3

    Keeping Cash Simple

    As regulatory reform is implemented in the US and in Europe, investors must now weigh their cash options by prioritizing stability, liquidity and return. In this new era of liquidity, all three factors may not be available in a single investment option.

    Reform Ushering Change for Investors

    Following the global financial crisis, regulators and legislators across the globe, began rethinking cash investments. As a result, the cost of capital preservation has changed for investors.

    Global: Central Bank Policy

    Global central bank policy, and more specifically, quantitative easing, has pumped unprecedented amounts of reserves—in the trillions of dollars—into the banking system. Central bank rates remain at historic lows, impacting the potential returns on traditional liquidity products such as short term cash deposits.

    Source: Annual data from Bloomberg as of April 13, 2016. For illustrative purpose only.

    Global: Basel III

    Basel III was introduced to improve the banking sector’s ability to absorb shocks as a result of financial or economic stress. Basel III is meant to bolster liquidity and capital requirements for the banking sector. Financial institutions must implement the components by 2019. Regulators worldwide are implementing with faster timelines, increased minimum standards and significantly higher requirements for systemically important institutions. Accepting short term cash deposits onto bank balance sheets is becoming challenging. 

    For illustrative purpose only.

    US: Money Market Fund Reform

    Investors have historically favored prime over government-only money market funds, due to the higher yield potential. In late 2016, the Securities & Exchange Commission (SEC) is enforcing changes to money market funds based on type of fund and investor. As a result, in mid-October 2016 non-government money market funds will be subject to liquidity fees and redemption gates. A floating net asset value per share pricing for institutional prime and institutional municipal funds will also be in effect. 

    Floating Net Asset Value (NAV) funds must price and transact in their shares at the current NAV, calculated by valuing portfolio instruments at market value, in the case of securities for which market quotations are readily available, or, at fair value every day out to four decimal places. Stable NAV funds have the ability to use the amortized cost and penny rounding methods out to two decimal places, to typically trade at $1.00 value.

    Europe: Money Market Fund Reform

    The much-anticipated reform that will apply to Money Market Funds (MMFs) domiciled, managed or marketed in the European Union has been published in the Official Journal of the European Union. This marks a conclusion of the multi-year legislative process and initiates the countdown towards the implementation deadline. New MMFs launched will have to comply with the new regulation by June 2018, while existing MMFs will have to comply by December 2018. This reform will change the EU-domiciled MMF landscape by providing new categories of funds and requirements for each category.

    For illustrative purpose only

    Prioritize: Stability, Liquidity or Return?

    Traditional cash investments may not be available, work the same way or offer competitive returns—even as rates rise. Individual and institutional investors must look at the entire spectrum to prioritize their investment objectives.

    Liquidity Solutions Across the Spectrum

    VIEW LESS DISCLOSURE

    Source: GSAM. For illustrative purposes only. Liquidity, performance and risk characteristics of actual funds will vary. When considering a fund, please see the prospectus for additional information. Potential Risk represents the potential for liquidity risk which is comprised of implied term, lockup of investment and diversification of holdings. GSAM offers products across the liquidity spectrum. Please see additional disclosures in the back of the document. Implied term refers to the period of time an investor is expected to hold an investment, even if not legally required to do so. For example, term deposits are bank deposits with a required period before an investor can receive their cash. However,  short duration bond funds or bond funds, although lacking a requirement holding period, are rarely used for daily liquidity purposes. Lockup of investment refers to a period of time in which an investor cannot receive their cash back. For example, a 3 month term deposits are bank deposits with a required 2 month period before an investor can receive their cash. Treasury money market funds include holdings of government securities issued by the United States Department of Treasury. Tax Exempt money market funds are designed to maximize current income, preserve capital and maintain liquidity, by investing in municipal obligations issued by or on behalf of states, territories and possessions of the U.S. The interest is exempt from regular federal income tax. Government money market funds invest in cash, government securities and/or repurchase agreements that are collateralized solely by government securities or cash Prime money market funds primarily invest in corporate debt securities are referred to as prime funds. Ultrashort Duration bond funds are mutual funds that generally invest in fixed income securities with extremely short maturities, or time periods in which they become due for payment. Term Deposits are deposits in an interest-paying account that requires the money to remain on account for a specific amount of time or term. Term deposits may contain counterparty risk of the bank issuing the term deposit. Diversification does not protect an investor from market risk and does not ensure a profit. Short Duration bond funds may invest in corporate and other investment-grade US fixed income issues that have duration of one to 3.5 years.

    GSAM Liquidity Solutions

    Offering liquidity solutions for more than 35 years, our goal is to help our clients preserve capital, maintain liquidity and seek competitive yields, while consistently managing risk.

    Explore Our Products and Service

    With tailored products and services in money market and short duration strategies, in all major currencies, we offer the insight you need to make better-informed decisions in your liquidity portfolios. Our wide range of products enables us to offer targeted solutions from a strong team of portfolio managers, combining global market intelligence with independent risk analysis, research and quality control.

    Money Market Funds

    Offering government, tax-exempt and taxable solutions

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    Short Duration Funds

    Offering ultra-short, government only, tax-efficient and opportunistic Solutions

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    Separately Managed Accounts

    Offering full spectrum

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    Liquidity Solutions Portal

    Trading platform for your liquidity needs

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    Keeping Cash Simple

    Download the Brochure

    EU Money Market Reform

    Regulation Nearing Completion

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    Liquidity Reserves Plus Funds

    GSAM's VNAV Money Market Fund range

    DOWNLOAD

    Compare Floating NAV to Stable NAV Investments

    This calculator helps you determine how Stable and Floating NAV products can suit your investment needs.

    Related Insights

    July 12, 2024

    Global Fixed Income Weekly: Musings

    In this weekly insight, we bring the global economy and fixed income markets to you. Macro at a Glance covers the latest developments in growth, inflation, and labor markets, while Policy Picture and Central Bank Snapshot details our outlook for monetary and fiscal policies. Navigating Fixed Income summarizes how our view of the world and financial markets informs and impacts our investment views.
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    VIEW LESS DISCLOSURE
    VIEW LESS DISCLOSURE

    Basel III: a comprehensive set of reform measures, developed by the Basel Committee on Banking Supervision, to strengthen the regulation, supervision and risk management of the banking sector.

    Reverse Repo: Reverse repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) borrows money from commercial banks within the country. It is a monetary policy instrument which can be used to control the money supply in the country.

    Mark-to-market: also known as fair value accounting refers to accounting for the "fair value" of an asset or liability based on the current market price, or for similar assets and liabilities, or based on another objectively assessed "fair" value.

    Liquidity fee: A fee taken against redemption proceeds and retained by the fund. Such fees are intended be a disincentive for shareholders to redeem shares of a fund in distress, and also to help bolster the liquidity levels in a fund by infusing the fund with the cash withheld from redemption proceeds.

    Redemption Gate: A method that funds may use to stem redemptions by imposing a temporary suspension of a shareholder’s right to redeem shares of the fund.

    THIS MATERIAL DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY JURISDICTION WHERE OR TO ANY PERSON TO WHOM IT WOULD BE UNAUTHORIZED OR UNLAWFUL TO DO SO.

    This material is provided for informational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. This material is not intended to be used as a general guide to investing, or as a source of any specific investment recommendations, and makes no implied or express recommendations concerning the manner in which any client’s account should or would be handled, as appropriate investment strategies depend upon the client’s investment objectives.

    This material and the views and opinions expressed herein are for informational purposes only and do not constitute research, investment advice, or an offer or solicitation to buy or sell securities. Some views expressed are solely those of the speaker(s) for this session and do not necessarily reflect the views of The Goldman Sachs Group, Inc. or its affiliates. The views presented should not be taken as investment advice, an endorsement or recommendation of The Goldman Sachs Group, Inc. or its affiliates. Views provided are as of October 2015 and the Goldman Sachs Group, Inc. or its affiliates have no obligation to provide updates or changes.

    Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. We have relied upon and assumed without independent verification, the accuracy and completeness of all information available from public sources.

    Any economic, market forecasts and case studies presented herein are for illustrative purposes only and are subject to change without notice. Goldman Sachs has no obligation to provide updates or changes.

    Goldman Sachs does not provide accounting, tax or legal advice. Goldman Sachs does not provide accounting, tax, or legal advice. Notwithstanding anything in this document to the contrary, and except as required to enable compliance with applicable securities law, you may disclose to any person the US federal and state income tax treatment and tax structure of the transaction and all materials of any kind (including tax opinions and other tax analyses) that are provided to you relating to such tax treatment and tax structure, without Goldman Sachs imposing any limitation of any kind. Investors should be aware that a determination of the tax consequences to them should take into account their specific circumstances and that the tax law is subject to change in the future or retroactively and investors are strongly urged to consult with their own tax advisor regarding any potential strategy, investment or transaction.

    Confidentiality
    No part of this material may, without GSAM’s prior written consent, be (i) copied, photocopied or duplicated in any form, by any means, or (ii) distributed to any person that is not an employee, officer, director, or authorized agent of the recipient.

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