Cash is king at Pershing

Jun 5, 2008 @ 2:41 pm

By Bruce Kelly

Cash is king for Pershing LLC’s broker-dealer and investment adviser clients.

The firms' allocations to money market funds and other cash products have soared over the past year, reaching 15% of the $948 billion assets Pershing holds in custody globally, said Brian Shea, president and chief operating officer of the Jersey City, N.J.-based firm.

Typically, Pershing's broker-dealer and investment adviser clients have an allocation of 10% cash, said Mr. Shea, who spoke this morning at Pershing's annual conference for clients in Hollywood, Fla.

Pershing has seen growth in the money market fund business over the past two to three years, but the pace of the shift to cash products began to accelerate rapidly last August, he said.

“The clear inference is that there is a flight to safety,” Mr. Shea said.

Cash products are a more conservative and defensive position, he said, adding that Pershing hasn’t done a formal survey of its clients about the change.

Mr. Shea said that a big concern for broker-dealers and investment advisers is: When is the right time to become more aggressive and reallocate assets? Pershing's U.S. broker-dealer and investment adviser clients have about $900 billion in assets.

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