Liquidity solutions – balancing diversification, yield and risk control

Bonds and cash in focus
April 2023 | 2 min read   

Liquidity solutions – balancing diversification, yield and risk control 

When it comes to cash management, there is quite a variety of solutions available in the market to choose from.  

Government bonds, certificates of deposit, commercial papers and bank deposits are among the most common options available today. Therefore, we are now going to analyse these alternatives considering five criteria: liquidity, security, consistency, yield and diversification. As illustrated in the graph below, for the other options only one or two criteria clearly stand out.



High-quality government bonds are particularly liquid due to their market size and considered safe as backed-up by governmental authorities, but, despite consistent over time, the yields and returns they have delivered in the last decade haven’t been particularly attractive.



Certificate of deposits sold by banks and credit institutions and commercial papers are aimed to cover short-term funding needs of a single issuer, resulting in no diversification. Moreover, commercial papers are offered only by a selected number of large companies and are unsecured, as they are not backed up by any form of collateral.


Bank deposit rates have slightly increased recently, but they are still not particularly attractive due to the decade of ultra-loose monetary policy. Additionally, in case of bank liquidation, deposit guarantee schemes can reimburse only a limited amount of money to compensate clients: for instance, under EU rules, depositors are protected up to 100.000€.



Liquidity solutions, in our opinion, provide the best combination as they satisfy all the aforementioned criteria. Due to their investment universe, they represent one of the less risky options available today; their market size allows a high level of liquidity, which can be beneficial in periods of heightened volatility. Additionally, these solutions offer a diversification* potential by complementing other asset classes; as yields for this segment have become more attractive lately, they can enhance positive returns in investors’ portfolios.

Amundi, your trusted partner for cash management1, offers a full range of added-value services to address your liquidity needs.

To learn more about our product range, please visit our Best Ideas.

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* Diversification does not guarantee a profit or protect against a loss.
(1) No1 in Money Market Management in Europe in euros. FundFile - End June 2022 - Open-ended Funds domiciled in Europe and in euros only.

Important information

Unless otherwise stated, all information contained in this document is from Amundi Asset Management S.A.S. and is as of 21 April 2023. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management S.A.S. and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. All investors should seek professional advice prior to any investment decision, in order to determine the risks associated with the investment and its suitability. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results.

Date of first use: 21 April 2023
Doc ID: 2851831

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