Investment Advisor Portfolios - Among several available investment options, you may choose an investment advisor to run a custom-tailored investment portfolio that maps to your company's particular risk tolerances and liquidity needs. Investment advisors often receive fee-based compensation for their services. Investment advisors are also required to act as a fiduciary on their clients' behalf - that is, they are mandated to act in your best interest.
-
Money market funds: Money market funds provide daily liquidity and by law must maintain a weighted-average maturity of 90 days or less. While some liquidity is necessary to meet burn rates and unscheduled expenses, you may be able to afford to move a majority of your cash into securities that, while still conservative, offer longer-maturities and potentially higher-yields.
-
Short-term bond funds: Short-term bond funds invest in securities with longer maturities; however, the funds may have fluctuating net asset values, meaning that you could post either a realized gain or loss any time you need liquidity from a fund.
-
Self-directed portfolios: You can construct your own portfolio by purchasing investment products such as certificates of deposit, commercial paper and corporate notes, from banks and brokerage houses. However, this option may require internal research staff, deep investment knowledge and the most time.
-
Brokerage portfolios: Brokers may manage cash portfolios for "no fee," however, this does not mean they aren't compensated. Instead, the brokerage firm may receive commissions by trading securities into and out of your portfolios. It is prudent to consider the potential conflict of interest that may exist under such an arrangement, as the brokerage firm's revenue may be directly related to how the firm manages your cash portfolio.
