Treasurers take on more risk for higher yields

The demand for yield among corporate treasurers continues to grow along with an appetite for more risk, according to new research from JP Morgan Asset Management (JP Morgan).

Based on a survey of 487 treasurers worldwide over July and September this year, JP Morgan's Annual Global Liquidity Investment Survey revealed that despite concerns regarding the European debt and the US economy, risk appetite among corporate treasurers is continuing to grow on the back of last year's results.

While the survey showed that surplus cash levels are at historic highs and gradually climbing, treasurers were found to be less satisfied with the returns on their cash balances. 

Return on investment is now the key indicator for measuring investment success, with sentiment for yield growing from 48 per cent in last year's survey to 64 per cent this year. The report added that treasurers are now more willing to take on more risk and sacrifice daily liquidity in order to achieve higher yields.

At the same time, risk management is now the third most important issue for treasurers, moving up from fifth in 2010. When selecting a primary bank, treasurers are now more focused on the financial strength of an institution rather than the importance of relationship management - down from 62 per cent in 2010 to 50 per cent this year.

"Treasurers are increasingly recognising that the decision to seek out additional yield cannot be taken in isolation: it will touch on many areas of investment policy and an organisation's overall approach to the investment management process," said head of global liquidity at JP Morgan Asset Management Robert Deutsch.