This weekend's Barron's features a "Where to Stash Cash" brief, entitled, "Be Like Buffett and Buy T-Bills." The piece says, "Warren Buffett parks most of Berkshire Hathaway’s cash in ultrasafe U.S. Treasury bills, and individual investors may want to consider following Buffett's lead now that the yields are as high as 3%. Treasury bills, which are U.S. government securities maturing in less than a year, are a good alternative to money-market funds and bank certificates of deposits. Interest is exempt from state and local taxes, unlike CDs. Investors can buy them through the government's TreasuryDirect program or through banks and brokers." Barron's adds, "Buffett, the longtime CEO of Berkshire Hathaway, prefers T-bills to other short-term debt such as commercial paper (a corporate IOU) because he never wants to worry about the safety of Berkshire's cash trove, which totaled $105 billion on June 30. T-Bills are sold with maturities of three, six, and 12 months as well as four and eight weeks. The three-month bill now yields 2.5%; the six-month bill, 3.05%; and the one-year bill, 3.2%, according to Bloomberg. Yields have risen from just above zero a year ago ... with the key Federal fund rate now at 2.25% to 2.5%. Another way to get exposure to T-bills is through exchange-traded funds like the $20 billion iShares Short Treasury Bond ETF (SHV), now yielding 2.1%. It has an average maturity of about four months and holds U.S. Treasuries maturing in a year or less. For more yield, and a little rate risk, there's the iShares 1-3 Treasury Bond ETF (SHY), now yielding close to 3% with an average maturity of about two years." Also, The Wall Street Journal's "Heard on the Street" column writes, "Dry Powder Key to Silicon Valley Bank Rebound." They tell readers, "SVB Financial Group, parent of Silicon Valley Bank, has been at the heart of the venture-capital industry for many years. A lot of young technology and life-science companies deposit the venture money they raise into the bank, and venture-capital firms borrow from the bank before drawing down on their limited partners’ commitments.... As for deposits, SVB has sources of funding to draw on to sustain asset growth. Over $190 billion of client money as of the end of June was held off balance sheet in vehicles such as money-market funds. Clients might expect to be compensated with higher rates to move it back into deposits -- but that is still better than the alternative of needing to slow balance-sheet growth, which some banks might face."
