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In the April edition of our Money Fund Intelligence, we profile Tory Hazard, President and COO of Institutional Cash Distributors. Hazard talks about the growth of ICD, which has expanded beyond money funds to include short-​term bond funds, SMAs, private funds, and bank deposit products. He says, "Institutional Prime money funds are still going to be a very important part of the portfolios." Hazard also discusses enhancements to the ICD Portal slated to debut next week to help investors deal with upcoming reforms. He says, "​We'​re extremely excited about 2016 and beyond." (​We reprint the MFI article below. For more on ICD'​s enhancements, see our April 15 News, "Treasury Strategies, Fitch on New Disclosure; ICD Adds Enhancements," or see ICD'​s press release.")

MFI: Tell us about ICD'​s history. Hazard: Institutional Cash Distributors, or ICD, was launched in 2003 by Tom Newton (​Chairman), Jeff Jellison (​CEO, NA), and Ed Baldry (​CEO, EMEA). I joined the company in 2009 and currently serve as President and COO. MFI: How much do you distribute? Hazard: We have over $​70 billion in assets in the U.​S., and about $​8 billion offshore. We have approximately 35 fund families on the portal and about 300 funds. That includes money funds, as well as other types of portfolios. When we saw that changes were [​proposed] with money fund reform, we were very active in fighting against onerous over-​regulation. We were happy when the rules finally came out [​that] they included the simplified tax accounting method. That was, as we saw it, the biggest challenge that was going to face prime money market funds. With that [​solved], Institutional Prime money market funds are still going to be a very important part of the portfolios.

MFI: What is your best feature? Hazard: For us, the main attraction is the selection of products. Not only do we have all different types of money market funds in one place for efficient trading, we also offer other funds for clients. We have a federally insured cash account -- several clients are invested in that. You can invest [​via] the portal and it flows all the way through to our reporting and our "​Transparency Plus." Also, we have several clients that are invested in short duration bond funds that are looking to pick up a little yield, especially in Europe, to offset the [​negative yields] that they'​ve been [​experiencing]. And we have clients that are invested in SMAs through ICD and, again, those positions are put into the Transparency Plus risk analytics.

Then, through our relationship with Tradeweb, you can purchase Time Deposits through [​their] platform, and that is integrated into ICD. So selection is a big part of it. We knew that our clients wanted additional products, so that'​s what we were focused on over the last year and a half. We'​re also focused on providing the best VNAV solutions. We'​ll be able to show throughout the portal various ways to use the new information that is being reported so that our clients can make great decisions -- not only on the right products to purchase, but to do so in a way that is efficient and streamlined for them.

MFI: What are some other attractions? Hazard: A second major benefit would be the streamlined nature of how ICD delivers its product. More than 100 of our clients have integration into 10 different treasury workstation [​platforms] -- so we work with all the relevant treasury workstations. We also have "​auto-​pay" technology, which is helpful in some situations with the settlement. If certain parties need that money quicker, the secure automated payment product is available to them to help streamline that process. The other major benefit is our service. We put together a global trading desk. We have desks that operate in London, Boston, and San Francisco.... So it'​s been a combination of the service we provide, the products we provide -- the technology products as well as the investment products -- and the integration. Also, we have great relationships with our fund companies.

MFI: Are customers ready for reform? Hazard: Ninety five percent of our clients have not made any changes to their lineups. Just a small portion of them have started to make some moves from prime funds into other products, such as these federally insured accounts or government accounts. It'​s just the uncertainty, I think, that'​s causing a small amount of them to do that. We'​ve been going on road shows and meeting with clients in various parts of the country.... What we'​ve found is, when they understand the fees and the gates and look at the value of different investment types versus their objectives, they'​re finding that Prime funds are still at the top of the list. Say it'​s a 15 basis point [​spread] between Government and Prime funds -- in a billion dollar portfolio would leave over $​1 million a year on the table.... They also realize that the fund managers are really, for their own viability, going to manage the assets to keep their weekly liquidity well above that 30%. They know that if they are in a position where they need to impose a fee or a gate, they'​re going to have a lot of trouble competing with the funds that don'​t.

MFI: Have higher yields restored fees? Hazard: Absolutely. The interest rate hike has helped to restore our margins closer to where we used to be. It'​s a welcome relief for us, because what we'​ve done over the last several years is we have invested an enormous amount of money in our technology. In doing so, we made the bet that at some point, we would restore fees back to the normal profit margins, and it'​s been moving in that direction.

MFI: Are investors getting "​re-​sensitized" to yield? Hazard: If you look at the AFP Liquidity Survey, capital preservation is still the number one goal, with liquidity being number two. Yield is a distant third. But I think yield is a consideration for clients if they can put a portfolio together that has capital preservation and liquidity in mind. If they look at their analytics and their concentrations, there are ways for clients to put portfolios together that will increase yield while reducing risk. We'​re seeing that happen a lot more. They'​re looking at how they can optimize their portfolio, which is something that we haven'​t seen in a long time.

MFI: Tell us about your global investors. Hazard: We offer funds in 8 different currencies for our clients. Some are overseas for strategic reasons and some are overseas because of American tax policy. Each country has its own complexities. In Europe, where banks and money funds have negative yields, we see a lot of clients investing in short duration bond funds to get an overall positive return.

MFI: Are you looking to expand your offerings? Hazard: Absolutely. We have about 20 short duration bond funds on our platform, globally. The way that we'​ve always built out our fund lineup is, if a client requests a particular product or fund, we will go to that fund company and set them up on our platform. We'​re doing that right now with some of the private funds that are coming on our platform. MFI: Any private funds live on the platform yet? Hazard: Yes.

MFI: What is your outlook for the rest of the year? Hazard: We'​re extremely excited about 2016 and beyond. We have been working to prepare for this [​for some] time. We'​re getting a little bit of a break on interest rates. Our product lineup is extremely extensive, and we have the VNAV solutions that should lead the industry.... On April 14, we [​did] a webinar where we ... showcase[​d] the VNAV enhancements to the portal. We'​re also doing a road show, and we'​re going to publish a white paper that'​s going to discuss not only the challenges but the solutions to how corporate treasury is going to trade in this post-​regulatory environment.

MFI: How are clients feeling? Are they adjusting to the new reality? Hazard: They actually have become less apprehensive the more they see. We had a road show in Los Angeles last week, [​where] we unveiled a lot of the new features that we'​re including on ICD Portal to help them trade in this new environment. Once they saw the various types of information that they'​ll be receiving in various different views, they have gotten a lot more comfortable with the October reform requirements and time frame. We'​ve been talking with our clients from the beginning and getting their input on these money market fund reform enhancements in the portal. So they'​ve seen the development over the course of the last six months and we'​ve shared the results with some of our clients. (Contact us to request the full interview in the latest issue of Money Fund Intelligence.)

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