Maximizing Returns on Cash Holdings with Effective Segmentation Strategies

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BlackRock suggests viewing cash and short-term investments as a separate asset class that can deliver attractive risk-adjusted returns, stability, and liquidity in a fixed income portfolio.

Effective segmentation strategies can help individual and institutional investors maximize returns on cash holdings. BlackRock offers various investment solutions to meet clients' unique liquidity and return needs, allowing investors to take advantage of different strategies throughout each interest rate cycle. Investors should start with a discussion on segmentation, with cash typically falling into three distinct categories or tiers, and understanding liquidity needs can help optimize opportunities. While a company's investment policy will typically guide the choice of a specific strategy, investors should consider their investment objectives and risk tolerance when selecting a cash management option. BlackRock suggests exploring opportunities in the short end of the yield curve, as well as diversifying cash investments to optimize returns.