Short-Term Investment Portfolio

A short-term investment portfolio is a collection of liquid, high-quality instruments in which a company, public body, charity or financial institution places cash that it expects to need within months rather than years. Typical holdings include bank deposits, treasury bills, commercial paper, certificates of deposit, repurchase agreements and money market funds, with maturities usually up to one year, although some treasuries allow a slice of "core" cash to run to two or three years. The portfolio sits between operating cash and long-term investments, and its rules, such as permitted instruments, credit ratings, maturity limits and limits per issuer, are set in an investment policy statement. Its usual priorities are safety, then liquidity, then yield. In accounting, many of its holdings are reported as cash equivalents or short-term investments. Also see excess cash investment.