Citywire Cites Pimco's Schneider
Citywire published an article entitled, "Where the $1tn that moved into money-market funds could go," which tells us, "More than $1tn flew into money-market funds as investors sought safety during the worst of the 2020 pandemic, but those looking to deploy capital should not fire themselves headlong into risky bets to get the maximum bang for their buck. That is according to Jerome Schneider, head of short-term portfolio management at Pimco. Speaking on an internal commentary video, Schneider said 2020 was similar to the post-global financial crisis period when investors wanted comfort and liquidity above all else." He comments, "What we're saying to clients is that we need to be aware of two facets here. One, recognise that there's a very-low-rate environment, one that's dominated by an overwhelming amount of money-market assets near zero interest rates.... Whether that's T-bills, money-market funds or overnight repurchase agreements, and then combine that with the fact that investors are looking for opportunities to take steps out of those money market fund segments, perhaps for a little bit more income, perhaps for a little bit more yield, and in doing so, they need to be prudent." Citywire's piece adds, "Looking at what happened following the global financial crisis, Schneider said it is important to strike a balance between liquidity management, capital preservation and total return. In addition, he said a number of money-market funds may not be as robust as first thought, so redeploying capital would make sense." Schneider adds, "This is why we sort of think about our tiered liquidity structure in this regard. Using some government money market funds as that firm foundation for overnight liquidity, and then at the same time, keeping it very minimal, but judiciously moving some additional assets into what we call our tier two or tier three type of solutions, which seek to compromise and find opportunities into the premiums for the next few months, or even, perhaps, the next few years." (See the PIMCO "Viewpoint", "Stepping Out From Cash: Short-Term Strategies for Today’s Markets," for more.)
