Balancing investment liquidity and maturity to increase yield

The funds in many health care investment portfolios are invested for a shorter period of time than necessary. A more efficient approach to investment liquidity is to select instruments that, while having maturities beyond a short-term range, can be sold before maturity and provide funds when needed....

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Bibliographic Details
Published in:Healthcare financial management 1992-04, Vol.46 (4), p.15-15
Main Author: Seidner, A G
Format: Article
Language:English
Subjects:
Cash flow
Credit ratings
Criteria
Financial instruments
Financial Management, Hospital - methods
Health administration
Health care industry
Interest rates
Investments
Investments - economics
Liquidity
Liquidity (Finance)
Management
Portfolio management
Selection
Short term
United States
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Summary:The funds in many health care investment portfolios are invested for a shorter period of time than necessary. A more efficient approach to investment liquidity is to select instruments that, while having maturities beyond a short-term range, can be sold before maturity and provide funds when needed. Such investment instruments must: 1. be issued in a negotiable format so that they can be sold to a dealer or bank and delivered for payment, 2. be issued by entities that are recognized or extensively traded within the investment community, 3. have a good credit rating. As long as the foregoing criteria are met, an investor may purchase instruments with longer-term maturities to achieve the higher yields they normally command. An investor must remember that market prices for interest-bearing securities can change. This is called interest rate risk. The investor should balance maturities from the short-term area to a longer-term range.
ISSN:0735-0732