Did you ever find out............Macquarie Cash Management...

Did you ever find out............

Macquarie Cash Management Trust
Smart cash management solutions made simple
Investments in the Macquarie CMT
and the US credit Crisis
Does the CMT have any investments in Lehman Brothers?
No. The CMT only invests in Australian Bank and
government securities rated as A1 or A1+ by S&P.
Does the CMT have any exposure to US banks?
There is no direct exposure to US banks. The CMT only
invests in Australian Bank and government securities rated
as A1 or A1+ by S&P.
The Macquarie Cash Management Trust (CMT) is a very
secure investment and is structured to consistently deliver
security, diversification and liquidity.
Established in 1980, the CMT has held its AAAm rating from
Standard and Poor’s (S&P) - the highest credit rating available
to a cash management trust - for over 20 years. The AAAm
rating indicates that the CMT provides an extremely strong
capacity to maintain principal stability and to limit exposure
to principal losses due to credit, market, and/or liquidity risks.
For more information on Standard and Poor’s visit
www.standardandpoors.com.au
How the CMT invests to manage
security and diversification
The CMT can only invest in government securities or bank
securities and deposits rated as A1 or A1+ by S&P. In addition,
the CMT can only invest 25% into a single A1 rated security.
The S&P AAAm criteria for cash management trusts requires
that the trust demonstrates prudent diversification among
well-rated organisations. This way, your money is not just
invested in a range of banks; it’s invested in a range of high
quality banks.
How the CMT is invested to
ensure liquidity
Many clients use the CMT to move large sums of money,
so liquidity (i.e. the ability for investments to be converted to
cash quickly) is a key requirement. There are stringent and
precise maturity limits to which the CMT adheres. This means
that you have easy access to your cash when you need it.
Who looks after my interests?
When you invest in the CMT your assets are held in trust for
you. As such you are not investing directly with Macquarie
Bank Limited and your assets are held separately to all other
Macquarie assets.
The Responsible Entity (RE) is accountable for the
management of the CMT and is under a strict duty to act in
the best interests of the CMT unit holders to the exclusion of
the RE’s own interests. This duty is paramount in all decisions
made regarding the management of the CMT.
How to contact Macquarie
1800 808 508
www.macquarie.com.au/adviser
09/08
Macquarie Cash Management Trust
Smart cash management solutions made simple
Macquarie CMT – Essential information
Is the CMT a bank account?
No. It is a trust.
What is a trust?
The key difference between a traditional transaction bank
account and a trust, such as the Macquarie CMT, is the
legal structure. As a trust, the CMT is governed by a
Constitution. This means that rather than having your funds
placed directly on the Macquarie Bank Limited balance sheet,
they are invested in line with the CMT constitution. (More
information on the CMT constitution is provided below.)
Who is responsible for the trust?
Macquarie Investment Management Limited (MIML) is the
Responsible Entity. MIML is one of Australia’s most successful
fund managers, managing more than $54 billion for over
590,000 investors (as at 31 March 2008).
The CMT investment style
and structure
Who decides what the CMT will invest in?
The investment decisions of the CMT are governed by the
CMT constitution.
In addition, in order to maintain the S&P AAAm rating (the
highest rating available to a cash management trust), the
CMT must adhere to strict criteria set out by S&P.
Who makes investment decisions for the CMT?
MIML as the Responsible Entity for the CMT has a team of
experts who monitor the quality of the Trust’s investments
through ongoing research and risk management procedures
to ensure compliance with defined investment parameters
governed by the Constitution and the AAAm rating of S&P.
How are investments in the CMT held and managed?
■■ The CMT’s assets are held completely separately from
all other Macquarie assets.
■■ All CMT assets are held in trust solely for the benefit of
CMT unit holders.
In addition, MIML has an independent credit team within its
Funds Group that constantly monitors all counterparties with
which the CMT may invest. Any exposures are monitored
on a daily basis by the credit team.
Who is Standard and Poor’s (S&P)?
S&P is the world’s foremost provider of independent credit
ratings, indices, risk evaluations, investment research, and
data. S&P has been rating money market funds world-wide
for 20 years and is the leading rating agency in this sector.
S&P ratings give you:
■■ An independent opinion of the risks that could affect
stability of principal,
■■ A robust methodology focused on factors that affect the
fund’s net asset value, including credit, counterparty,
interest rate and liquidity risks,
■■ Weekly surveillance of the fund’s holdings to ensure the
integrity of the rating, and
■■ An easily understood rating scale.
For more information on Standard and Poor’s visit
www.standardandpoors.com.au
What is the AAAm rating?
The AAAm criteria is highest rating available to a cash
management trust. The rating structure is below.
Principal Stability Ratings Scale
How to contact Macquarie
1800 808 508
www.macquarie.com.au/adviser
09/08
AAAm
Fund provides extremely strong capacity to maintain
principal stability and to limit exposure to principal losses
due to credit, market, and/or liquidity risks.
AAm
Fund provides very strong capacity to maintain principal
value and to limit exposure to principal losses due to
credit, market, and/or liquidity risks.
Am
Fund provides strong capacity to maintain principal value
and to limit exposure to principal losses due to credit,
market, and/or liquidity risks.
BBBm
Fund provides adequate capacity to maintain principal
stability, but adverse market conditions and/or higher
levels of redemption activity are more likely to lead to
a weakened capacity to limit exposure to principal loss.
Bm
Fund has uncertain capacity to maintain principal stability
and is vulnerable to principal losses.
Dm
Fund has failed in its capacity to maintain principal
stability, resulting in realized or unrealized loss of principal.
CMT - Frequently Asked questions
(Source - www.standardandpoors.com.au)
Macquarie Cash Management Trust
Smart cash management solutions made simple
What is the investment criteria required to acquire and
maintain AAAm rating?
Cash management trusts achieving the AAAm rating have
to satisfy robust criteria including:
–– Underlying investments must have the highest ratings
from Standard & Poor’s (minimum 75% rating of A1+
and a maximum of 25% A1),
–– The Trust must have a very low sensitivity to interest-rate
risks with a weighted average maturity limited to
a maximum of 70 days, and
–– Detailed information on the Trust’s holdings must be
submitted regularly to Standard & Poor’s dedicated
surveillance analysts.
Security and the Macquarie CMT
How does the Macquarie CMT manage its investments
to deliver security?
The principle objective of the Macquarie CMT is to preserve
capital. This is reflected in the CMT’s Constitution, which
puts parameters around both choice of investments and the
maturity length of those investments.
The investment decisions of the CMT are governed by the
CMT Constitution, which sets out the Responsible Entity’s
powers and duties. In addition, in order to maintain the
S&P AAAm rating (the highest rating available to a cash
management trust), the CMT must adhere to rigorous
and precise criteria.
What does the AAAm rating mean to the security
of the CMT?
The AAAm rating reflects the CMT’s capacity to maintain
principal stability and to limit exposure to principal losses
due to credit market and/or liquidity risks. The AAAm rating
also reflects the quality of the underlying investments.
To maintain the AAAm rating, detailed information on the
CMT’s holdings must be submitted every week to Standard
& Poor’s dedicated surveillance analysts.
Does the CMT invest in Macquarie Bank Limited?
As Macquarie Bank Limited is currently rated A1 by Standard
and Poor’s, the CMT could invest up to of 25% of its portfolio
into Macquarie Bank Limited. Currently, the CMT invests
around 12% of the portfolio with Macquarie.
Can Macquarie Group access the money in my CMT
without my authority?
No, your CMT is held in trust for you, and is held separately
to the assets of the Macquarie Group. If the Macquarie
Group was to need additional funds to operate its businesses,
it could NOT access your CMT to do so.
It’s important that you understand that your money is
diversified across a number of government securities and
bank securities and deposits.
If Macquarie defaulted, what would happen to my CMT?
The Macquarie CMT is managed and held separately to all
other Macquarie Group assets and therefore in the unlikely
event that the Macquarie Group needed additional funds to
operate it could NOT access the CMT to do so. The funds
in the CMT are held in a trust, as such you are not investing
directly with Macquarie Bank Limited. In addition, the CMT’s
investment are well diversified across a number of government
securities and bank securities and deposits.
The CMT and diversification
How does the Macquarie CMT ensure diversification?
The Macquarie CMT has strict limits that must be met to
comply with its Constitution and to maintain its AAAm rating.
These limits are:
■■ Maximum 25% exposure to any one A1 bank backed paper.
■■ Maximum of 33% to any one A1+ bank issuer. This can
increase to 50% for A1+ banks, where the excess relates
to overnight deposits.
Plus:
■■ A minimum of 10% of the investments maturing within 7 days.
■■ A maximum weighted average maturity of 70 days.
■■ A maximum term of any individual investment of 12 months.
The CMT and Liquidity
Does the AAAm rating offer a high degree of liquidity to
CMT investors?
Yes as the AAAm criteria stipulated that the Trust must have
a very low sensitivity to interest-rate risks with a weighted
average maturity limited to a maximum of 70 days. To ensure
compliance, detailed information on the fund’s holdings must
be submitted every week to Standard & Poor’s dedicated
surveillance analysts.
How to contact Macquarie
1800 808 508
www.macquarie.com.au/adviser
09/08
CMT - Frequently Asked questions
Macquarie Cash Management Trust
Smart cash management solutions made simple
Bank backed securities A security provided by a bank whose payment is the responsibility of the issuer.
Bank bill A bill of exchange of which the acceptor or endorser is a bank.
Constitution
The written document lodged with the Australian Securities and Investments Commission
(ASIC) which governs the operation of the Macquarie CMT.
Counterparty A party with whom Macquarie has an agreement to trade securities.
Unit A share in the assets of a managed investment scheme.
Bank (Australian)
An authorised Deposit-taking Institution (ADI). All Australian banks, including Macquarie Bank,
CBA, Westpac, etc are ADIs.
ADI
(Authorised Deposit-taking
Institutions)
Corporations which are authorised under the Banking Act 1959. ADIs include banks, building
societies and credit unions. All ADIs are subject to the same Prudential Standards but the use
of the names ‘bank’, ‘building society’ and ‘credit union’ is subject to corporations meeting
certain criteria. (Source APRA).
The regulator Banking in Australia is highly regulated. The governing body is the Australian Prudential
Regulation Authority (APRA). APRA has strict guidelines covering issues such as how much
liquid cash banks must hold, how and when they can lend money to other parts of their
businesses and limits on large exposures. APRA undertakes an annual review of EVERY bank
in Australia, including Macquarie.
How to contact Macquarie
1800 808 508
www.macquarie.com.au/adviser
09/08
Glossary
This information is provided for the use of licensed financial advisers only. In no circumstances is it to be used by a person for the purposes of making a decision about a financial product
or class of financial products. Macquarie Investment Management Limited (MIML) is not an authorised deposit-taking institution for the purposes of the Banking Act (Cth) 1959, and MIML’s
obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542. Macquarie Bank Limited does not guarantee or otherwise provide assurance in
respect of the obligations of MIML.