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What are your most trusted sources for making investment decisions?

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Topic Expert
Jeff Chase
Title: Advisory CFO
Company: Hazelcast, Juicebox Energy, and Social I..
(Advisory CFO, Hazelcast, Juicebox Energy, and Social Inertia ) |

I've been a start up CFO the last 7 years but was in some large public company finance teams (3Com, JDSU) including Treasury roles (Echelon, 3Com) and developed investment guidelines and related processes for significant cash balances and have relied on various folks. In my experience, investment advice and help with decision making came from:
1 - investment advisors working for the sell side firms (e.g., Citigroup Smith Barney, Goldman Sachs etc.), that were familiar with guidelines across corporates, and typically worked on the basis points of the transaction, and
2 - professional money managers that would be happy to charge you a fee to help you develop your investment guidelines (many suspects here, including the large banks, typically working on a fee basis on our invested cash).
3 - a third source could be banks that would provide products (MMFs, etc.) for short term cash that can offer you advice.
4 - Other related parties included wise board members (one of my best investment advisors was on our board at 3Com, came from a large bank and was a great sounding board), or your investors if you are smaller firm and your investors have a particular preference (strict adherence to <90 day liquidity, or only Treasury's or simple money market funds rated AAA).

Besides our board members/investors that are typically very astute, I probably trusted professional money managers the most, although hard to quantify, as the products they buy tend to look just like the products i would buy on my own from broker/advisors, given sufficient investing knowedge and experience. I can tell you that in the one case in the 10 years or so that I worked in Treasury roles, a sell side firm supposedly aware of our policy, failed to catch something that probably should have been detected sooner - this would probably not have had any chance of happening if there was an active, fee based money manager. That said, any AT or T should be sufficiently knowledgeable of their investment policies to eliminate risk and ensure priority 1 protect the capital is still number 1.

Hope that helps!/jeff

Topic Expert
David OBrien
Title: Treasury Consultant
Company: EE Treasury
(Treasury Consultant, EE Treasury) |

Dear Anonymous AT:

As a point of departure your first step in managing an investment program must be that of putting into place a well structured Investment Policy to be approved by your Treasurer/CFO/Board depending on the Treasury mandate from your Board.

The policy should address the following sections:
*Objectives: liquidity, preservation of capital and yield>>>in that order
*Authorized comapny traders
*Authorized couterparty brokers
*Controls
*Investment instruments: types, rating requirements, duration limits, issurer house limits

Like most Treasuries the categories of investments will probably be money market instruments such as: soverign obligagtions, government backed obligations, rated CP, Bank Time Deposits, rated mutual funds REPOs of the foregoing.

Past that I would have discussions with the asset management sales folks at your banks. Bewary of any advie that takes you out of instruments that meet our investment objectives.

Best wishes for all success..................

David L. O'Brien, CTP

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