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Liquidity Management

Learn about our holistic approach to cash segmentation strategies.

Navigating the liquidity landscape

Learn about the different aspects to consider relative to your unique liquidity needs and how Schwab Asset Management helps navigate the trade-offs and various offerings.  

Our approach

All clients have unique liquidity needs. For most investors with significant cash, capital preservation is paramount, and secondary is balancing the trade-offs between stability, liquidity, and yield. However, not all liquidity management solutions are the same and each comes with a varied level of risk and yield. To help navigate the trade-offs and various offerings, we employ a three-tiered cash segmentation strategy designed to address client goals based on time horizon.

People meeting (mindshare)

Transactional

Also referred to as everyday or operational cash, transactional cash is often used to purchase investments, pay bills, and manage daily expenses. Cash in this tier seeks stability, minimal volatility, and liquidity with frequent cash flows, and is short term—typically overnight to three months.

Strategic

Not needed for day-to-day cash requirements, strategic cash is also called savings and investment cash. It can be used to potentially earn a higher yield with investments that help to preserve principal while retaining easy, though potentially more limited, access to funds. The focus is on seeking stability/liquidity and yield with moderate cash flows and modest volatility. The time horizon is typically 3 to 12 months.

Opportunistic

For cash that can be invested for a longer term, the opportunistic tier is used to explore market opportunities that may be available further out on the yield curve. Stability and liquidity are weighed against these market opportunities, with the potential for higher yield but significantly less liquidity. These investments typically experience the highest volatility of the three tiers and typically have a target horizon of 12 to 24 months.

Compare solutions

  Transactional Strategic Opportunistic
Time Horizon Short term, typically overnight to 3 months Short to intermediate term, typically 3 to 12 months Longer term, typically 12 months or longer
Focus Seeks stability and liquidity Seeks stability, liquidity, and yield Potential for higher yield
Cash Flows Frequent Moderate Less frequent
Options

What we offer

Charles Schwab’s team of financial professionals offers deep experience in investment approaches and has access to a comprehensive lineup of tax-exempt and taxable strategies with risk-adjusted performance track records.

Liquidity Management resources

A quick yet detailed look at our views on managing liquidity and why it is so important.

An in-depth discussion of the hallmarks and objectives of a robust liquidity management program, as well as the potential trade-offs to consider.

Detailed presentation on Liquidity Management at Charles Schwab.

Contact us

Reach out to Schwab Asset Management to answer any questions you have about Liquidity Management at Charles Schwab.