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by  BlueBay Fixed Income teamB.Swensen, CFA Nov 3, 2023

Watch time: 2 minutes 44 seconds

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Hello all, and thank you for joining us. I’m Georgina Tzanetos, Editorial Director with Institutional Investor and welcome to our final conversation in our fireside chat series, Not the Time to Be Idle, Taking Action in Today's Credit Markets with RBC.

We've been speaking with experts around some of the most pertinent topics in today's credit markets, and we will end our series speaking on different ways to deploy cash as an investment strategy. I have with me today, Brandon Swensen, Senior Portfolio Manager on the BlueBay Fixed Income team at RBC. Brandon, where do you see the future of cash investing? Where do the opportunities lie in liquidity management?

The good news is the future of cash investing is going to look a lot like the past of cash investing, where the primary focus is on principal preservation first, liquidity second, and yield third. But that being said, the cash markets go through cycles just like other financial markets do. Longer term interest rates, stock markets all go through different cycles and patterns.

And so where we’re at today is at actually a pretty significant turning point in one of those cycles, where we’ve been through now a multi-year, very rapid increase in interest rates. And so what we’re really speaking with most institutional investors these days is around that decision of should we be managing our cash the way we have been the last few years, or given the changes in the market, should we be thinking about our cash and our liquidity a bit differently?

And I think one of the most important or valuable conversations to have with investors today is around that duration decision. How much duration risk do you want to have in your portfolio?

One way or another, it’s been quite easy for the last several years, as I mentioned, to keep a very short duration with your cash, benefit from those rising interest rates. But as we near the end of an interest rate cycle, which we think we're getting very close to, it's a very important time to be thinking more strategically about that duration decision with your cash and whether there are opportunities to make changes within that portfolio that could benefit the income you’re getting from your liquidity for a longer period of time as the cycle changes.

Well, thank you Brandon, and thank you all for joining us. This concludes our fireside chat series on important themes in today's credit markets. Thank you to our speakers and thank you all for watching.

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