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Treasurers, It’s Time to Review Your Investment Policy

  • By Staff Writers
  • Published: 6/20/2017

With interest rates starting to rise and new regulations being applied, now is an ideal time for treasury to review its investment policy to ensure it will permit the company to respond as the market environment evolves.

The new AFP Executive Guide to Investment Strategy and Policy, underwritten by J.P. Morgan Asset Management, recognizes that improved technology gives treasurers better visibility of cash and the ability to build more accurate cash position forecasts. In turn, this information enables treasurers to stratify cash into buckets, so that companies may be able to tolerate different levels of risk for each one. This guide has been written to help treasury practitioners develop an investment policy that permits the adoption of an investment approach, which reflects the company’s various different tolerances for risk.

The guide is structured in two parts. The first part reviews the current market environment, outlining the changes in the market—most notably the prospect of rising interest rates and the nature of bank and money market reform—and assesses how these factors are affecting treasurers managing surplus cash. The second part has been designed to support the treasurer’s decision-making process when classifying cash and drafting a new investment policy, or reviewing an existing one.

Again, now is the perfect time for treasurers to review their investment policy. Doing so should help them assess whether their policies are flexible enough to allow their organizations to take advantage of certain opportunities, while also keeping in mind their respective organizations’ tolerance for risk.

Download the AFP Executive Guide to Investment Strategy and Policy here.

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