Cash Management

Higher Yielding Cash Models Available

Freedom Advisors offers two categories of cash alternatives: Liquid Cash and Invested Cash.

Liquid Cash: Fully liquid cash available on demand will be placed in the custodian’s cash sweep vehicle.
Invested Cash: Where cash is part of a managed model allocation, it will be invested in a higher yielding cash instrument(s). Where cash does not have to remain fully liquid but is not part of a managed model allocation, the advisor may instruct EQIS to invest it in a higher yielding cash instrument.

EQIS Investment Policy on Cash: For all cash not required to be fully liquid in the custodian’s cash sweep vehicle, EQIS will pursue higher risk-adjusted returns available by monitoring the published yields of eligible instruments, primarily money market mutual funds, and utilizing the security(s) it deems appropriate. Since cash in a model must be able to settle on or earlier than T+2 to match all other securities in the model, in today’s rate environment, and in most rate environments, a money market fund will offer the better yields combined with sufficient liquidity.

Liquid Cash

Cash Sweep: For monthly fee processing, sufficient cash must be available on demand in the custodian’s cash sweep vehicle, not in an instrument that requires trade settlement, such as a money market fund. EQIS seeks to limit the amount in the typically lower yielding cash sweep vehicle while at the same time minimizing manual work and disruption caused by accounts not having sufficient cash on demand for fee collection. The current policy is to seek to maintain 1.5% of the value of the managed portfolio(s) in the cash sweep vehicle. This percentage will go up and down with cash flow, which primarily will be fee collection, dividends, and client deposits and withdrawals. We continue to monitor the effectiveness of this process with the objective of lowering the target to 1.0%, if possible. If excess liquid cash is held outside a managed model, it will appear in the Unaffiliated Cash portfolio. Advisors must monitor cash levels in Unaffiliated Cash on an ongoing basis and provide EQIS timely investment instructions.

Invested Cash

Cash Models: Two dedicated models have been set up that are 100% cash alternatives: Invesco Taxable Money Fund and Schwab Municipal Money Fund.

When a manager/model strategist allocates to cash within a model, one of these Cash Models will be used as a sleeve in the model.
A Cash Model can also be used as a standalone model to set aside reserve cash when a client wishes to hold cash in the account, not invest it, and restrict it from use for cash sweep.
- Although as an extra service to advisors, time permitting, EQIS will seek to monitor and inform advisors of excess cash in accounts beyond the 1.5% target reserve, it is the advisor’s responsibility to monitor accounts and provide EQIS timely instruction of what to do with excess account cash.
- These standalone Cash Models currently cannot be held in a Goldman Sachs account at the same time as a multi-manager UMA Model. This limitation does not apply to accounts at other custodians. For the next few months, when reserve cash is to be set aside in an account custodied at Goldman Sachs where the account already holds a multi-manager UMA model, we will purchase the money market fund in a Discretionary portfolio. This is a short-term exception as it is a manually intensive process.

Other Cash Instruments: A manager/model strategist may decide to invest a model’s cash allocation in a longer-duration, potentially higher yielding cash alternative instrument where available.