The majority of investors in the short-term market are primarily concerned about liquidity and capital preservation. This philosophy dictates a conservative investment posture including excellent credit quality, ample diversification, and liquidity.
The key element that distinguishes Reich & Tang from its competitors is that our investment philosophy places credit ahead of yield. Our focus on safety and preservation of capital continually drives our investment analysis and decisions. Nevertheless, Reich & Tang has a long history of providing competitive returns within strict credit quality and liquidity constraints.
Reich & Tang's investment process stresses a team approach. Our investment team has many years of experience in both the taxable and tax-exempt short-term credit markets. The Investment Credit Committee meets once a week or more often if needed, to determine our portfolio strategy as it relates to our forecast on the direction of interest rates, and to discuss credit issues and review individual portfolios for performance and compliance. All of our domestic money market funds are governed under Rule 2a-7 of the Investment Company Act of 1940 (“Rule 2a-7”). Our Investment Credit Committee monitors the portfolios on a daily basis to ensure compliance with Rule 2a-7's credit standards, as well as our own additional requirements. These meetings also provide a forum for new investment ideas and opportunities. The Investment Credit Committee also tracks current political and market events relevant to our investment analysis.
Within the framework of the interest rate forecast, portfolio managers determine their security selection, maturity selection and values in the market. Minimum levels of diversification and the maximum weighted average maturity for our short-term portfolios are determined by the particular goals established for each portfolio and any governing securities laws or regulations. Naturally, our interest rate outlook and cash flow projections will be factored into our investment selections.
One of the primary functions of the Investment Credit Committee is the development of an approved list of securities for each taxable portfolio we manage. The list is composed of the issuing institutions that meet the credit criteria, guidelines and objectives established for each portfolio. The portfolio managers are not permitted to deviate from the approved list. They may not unilaterally add issuers to the list but may delete names based on adverse market news. All names approved for investment by Reich & Tang must pass a credit risk checklist.
As an organization, we continue to believe that thorough, fundamental credit analysis is the key to continued success in this business.