Money Market
Understanding the complexities of today’s money market opportunities requires seasoned professionals. That’s why investors are choosing the roadworthy investment professionals at First National Capital Markets. Our brokers offer a multidisciplinary approach to plotting your course, drawing on years of real-world experience in the banking, insurance, municipal and public sectors. What results is the presentation of opportunities that fit the investor, never the other way around.
On an ever-changing horizon, our institutional brokers keep their eyes trained on the road ahead – in daily market and financial strategy meetings, and with compliance updates. Our commitment to continuing education enables us to identify tomorrow’s opportunities today, so investors can capitalize on new ideas before they are a disappearing image in the rearview mirror.
Short-term Investment:
Our short-term investment class from First National Capital Markets (FNCM) offers distinct advantages for clients who require a high degree of liquidity. Investments in this short-term class maintain maturity dates of one year or less.
Short Term Investments
U.S. Treasury Bills
US Treasury Bills are direct debt obligations of the U.S. Government, backed by the full faith and credit of the United States Treasury. US Treasury Bills maintain short-term maturities of one year or less and trade on a discount basis. Interest income, which is the difference between the discounted purchase price and the full face value (par) of the Treasury Bill, is received at maturity and is exempt from state and local taxes.
Agency Discount Notes
Agency Discount Notes are issued by a US Agency or Government Sponsored Enterprise (known as a GSE). Most Agency Discount Notes are issued by the Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac), the Federal National Mortgage Association (FNMA or Fannie Mae), the Federal Home Loan Bank (FHLB) or the Federal Farm Credit Bank (FFCB) to assist the agencies with their short-term funding needs. These notes are sold on a discount basis and have maturities of one year or less. Interest income, which is the difference between the discounted purchase price and the full face value (par) of the Agency Discount Note, is received at maturity.
Commercial Paper (CP) is short-term unsecured debt issued by companies in the form of promissory notes as an obligation of the issuer. It is generally not used to finance long-term investments but rather for meeting working capital requirements. Maturities range from overnight to 270 days (9 months) with the majority of issuance occurring with maturities of 30 to 90 days. CP is typically issued on a discount basis with interest income being received at maturity.
Commercial paper is, in most cases, rated. An example of CP ratings follows:
Money Market Mutual Funds
A Money Market Mutual Fund is a mutual fund that invests in short-term debt securities such as US Treasury Bills, Agency Discount Notes, Commercial Paper and Certificates of Deposit. Money Market Mutual Funds are required by law to invest in high-quality short-term debt allowing investors to participate in a pool of diversified investments. Money market fund managers attempt to keep the net asset value at $1.00 per share while allowing the dividend yield to fluctuate.
Negotiable CDs
Negotiable CDs are unsecured promissory notes guaranteed by the issuing bank with a minimum face value of $100,000 and a one-year or less maturity. The Federal Deposit Insurance Corporation (FDIC) protects the investment in a Negotiable CD up to $100,000. Terms available on Negotiable CDs range from seven days to one year.