SSGA's Bean Staying Short
A recent commentary from SSGA Portfolio Manager Todd Bean tells us, "Based on our fundamental and technical outlooks for the year, we've been managing the funds with short weighted average maturities and high levels of liquidity. This has kept the funds well positioned to benefit from heavier supply and higher rates, as well as better prepared to handle the volatility in flows." He explains, "Generally speaking, the increased supply of Treasury bills (T-bills) is a welcome event for money fund investors, particularly in the post-reform world where demand for government assets is much higher.... We view the supply increases as great buying opportunities for government strategies. We are also looking forward to the introduction of the two month T-bill auction starting in October. This duration is a natural fit for government money market funds. As the Treasury will eventually be moving maturity and settlement dates for the one- and two-month T-bills to Tuesdays, the diversification of maturity and settlement fits the daily cash flow needs of money market funds." Bean adds, "We are willing to remain shorter than our peers if we feel the market is underestimating future rates."
