The three portfolio managers for the Treasury Solutions funds are Tosi, Skurbe, and Joseph Rocco, a vice president who is involved in credit and risk management for Blackstone’s treasury operations. Their internal treasury cash-management strategies generated $25.8 million of income and $8.6 million of capital gains during 2012, according to the annual report. Assuming the capital gains aren’t part of investment income, the strategy would have generated a total return of 3.3 percent on average assets of $1.05 billion for the year.
“They do actively manage that to get a little bit of incremental yield,” said Meghan Neenan, a senior director at Fitch Ratings Ltd. in New York. “But it is all fairly conservatively managed and very liquid.”
Generating Income
Corporate treasurers generally forecast future cash needs and then invest accordingly, said Carfang at Treasury Strategies. Cash to run the business is typically kept in money- market funds or bank accounts, with reserves placed in investments that mature in 90 to 100 days. The remainder can be invested in longer-dated securities that provide higher yields.
U.S. corporate cash increased to $1.79 trillion at the end of last year from $1 trillion in 2000, according to an April 4 report by Treasury Strategies. Corporate cash totaled 1.93 trillion euros ($2.53 trillion) in countries that use that currency as of Dec. 31, and the comparable U.K. figure stood at 730 billion pounds ($1.13 trillion). With the U.S. Federal Reserve keeping interest rates near record lows, treasurers are challenged to generate income from their excess cash.
‘No Yield’
After coming under pressure from hedge-fund manager David Einhorn, Apple Inc. said last month that it would seek to return an additional $55 billion to stockholders through dividends and share repurchases. Apple earned a 2.3 percent return, including dividends, interest and capital gains, on the average cash and securities of $101.4 billion held on its balance sheet during the fiscal year ended Sept. 29, 2012, according to the company’s most recent annual report.
“Corporations have so much cash on their balance sheets and treasurers are saying there is no yield to be gotten anywhere,” said Gannon, a director at the National Association of Corporate Treasurers.