Stigma over T-Bills Persists as Investors Focus on “Sophistication”

Victor Xing

MPRA Paper from University Library of Munich, Germany

Abstract: Treasury bills outperformed a broad cohort of asset classes following this year’s violent bouts of risk-parity unwind, as rising deficit, retreats from globalization, and waning stimulus favor high quality low duration instruments. At the same time, T-bills provide an effective hedge to a hawkish rate path, for higher short-term rates would improve portfolio carry. Unfortunately, some institutions continue to view cash holdings as signs of inefficient capital allocation due to past decade's "yield-seeking" bias where “sophistication” was needed to counter low rates. As a result, asset managers remain hesitant to hold T-bills in size for fears that perception of “inactivity” would harm prestige; some managers also expressed concerns that “unsophisticated” allocations would raise questions over compensation.

Keywords: T-bills; cash; financial stability risks; monetary policy; volatility (search for similar items in EconPapers)
JEL-codes: E4 E5 G1 (search for similar items in EconPapers)
Date: 2018-11-25
New Economics Papers: this item is included in nep-mac
References: Add references at CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/90378/1/MPRA_paper_90378.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:90378

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().