How to combine the reverse repo of treasury bonds and money market funds

Mondo Finance Updated on 2024-01-30

Treasury reverse repo and currency** are commonly used financial management tools by investors, and they both have the characteristics of low risk and low return. However, they also differ in their investment methods and characteristics. When combining these two investment vehicles, investors need to consider the following:

1.Liquidity needs.

Treasury reverse repo is a short-term investment tool, with a maturity of 1 day, 4 days, 7 days, 14 days, 28 days, 91 days to 182 days. Currency** is a more flexible investment tool, and investors can subscribe or redeem** shares at any time. Therefore, investors need to choose the investment ratio according to their liquidity needs. If investors have higher liquidity requirements, they can choose more currencies**;If investors have lower liquidity requirements for funds, they can choose more reverse repo of treasury bonds.

2.Risk tolerance.

Although Treasury reverse repo and currency** are low-risk investment vehicles, their investment risks still exist. The risk of reverse repo of treasury bonds mainly comes from interest rate risk and credit risk, while the risk of currency** mainly comes from market risk and liquidity risk. Therefore, investors need to choose the investment ratio according to their own risk tolerance. If the investor's risk tolerance is low, more currencies can be chosen**;If the investor's risk tolerance is higher, he can choose more reverse repo of Treasury bonds.

3.Yield comparison.

The yield comparison of reverse repo and currency** is also an important factor for investors to consider. At the same level of risk, investors should choose investment vehicles with higher yields. If the yield of the reverse repo of Treasury bonds is higher than the yield of the currency**, investors can choose more reverse repo of Treasury bonds;Otherwise, select more currencies**.

4.Investment horizon.

There is also a difference in the investment horizon for reverse repo and currency**. Reverse repo of treasury bonds has a shorter investment horizon, while currency** has a more flexible investment horizon. Therefore, investors need to choose the investment ratio according to their investment horizon. If the investor's investment horizon is shorter, he can choose more treasury reverse repo;If the investor has a longer investment horizon, they can choose more currencies**.

To sum up, investors need to consider the above aspects comprehensively when combining reverse repo and currency ** of treasury bonds. At the same time, investors also need to pay attention to the impact of factors such as market changes and policy adjustments on investment, and adjust their investment portfolios in a timely manner.

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