Money Market Securities Research Articles

THE MARKETABLE SECURITY PORTFOLIOS OF NON‐FINANCIAL CORPORATIONS, INVESTMENT PRACTICES AND TRENDS

DURING THE LAST TWO decades, non-financial corporations have become increasingly important suppliers of funds to the money markets. Their holdings of United States government securities increased from $2.2 billion to $16.5 billion between 1939 and 1958. Holdings of other short-term securities are included under Other Current Assets in the estimates made by the Securities and Exchange Commission.' Although the exact portion of Other Current Assets consisting of short-term securities cannot be ascertained, the total of this account increased from $1.4 to $5.9 billion in the 1939-58 period. Because these large amounts of corporate funds are invested in money-market securities, changes in the investment practices of non-financial corporations influence relative rates of growth in various sectors of the money market. This study has two purposes: to describe the current short-term investment practices of non-financial corporations (Sec. II) and to indicate significant changes in these practices since 1939 (Sec. III). Marketable security portfolios of the largest non-financial corporations contain a high proportion of Treasury securities. The yield and other characteristics of alternative investments suggest that this practice sacrifices substantial income. In the past few years an increasing fraction of portfolios has been invested in non-Treasury securities. Data used in this study indicate that this trend may be expected to continue.