The world’s biggest asset manager wants hedge funds’ idle cash.
New regulations discourage big banks from holding hedge fund cash, leaving room for BlackRock to pick up the slack, reports the Financial Times. The firm is reaching beyond its traditional long term investors, catering the short term investors, like hedge funds, with products to put their excess money in. BlackRock hired Vanessa Van Brunt earlier this year to lead sales for products with daily liquidity for short term investors.
The world’s biggest banks can now be punished for relying on uninsured deposits, like hedge fund cash, that can quickly disappear during market turmoil. Post-crisis reforms have put more pressure on banks to be cautious about liquidity and holding “bad balances.” Retail deposits are considered the most reliable, with just a 10% chance of exiting within 30 days of market turmoil. Financial clients, including hedge funds, are ranked as 100% certain to pull funds, making them very unappealing to traditional banks.
Photo: Wikipedia.