• A Clearwater research insight, August 2025

Duration bets have paid off, but cash hasn’t lost all its luster (yet)

Written by:
Matthew Vegari

As we learned in an earlier blog about passing peak cash, leading corporate investment managers moved quickly as rates rose, shifting portfolio allocations from cash to corporate bonds. This multiyear pivot coincided with a change in duration strategy that is now leading to better performance.

For 2024-25, top-earning firms, with portfolio durations longer than 12 months (on a time-to-maturity basis), have seen returns nearly a percentage point higher than peers with durations at half a year or less.

Figure 1: Corporate client portfolio duration versus performance. Note: *Data through 5/2025 for Clearwater corporate clients with >$50M in assets, <= 90% allocated to cash (and equivalents), <=10% allocated to equities, with extreme outliers removed. Duration values are the average value for the last 12 months. Duration values near or at 0 suggest clients are invested in assets outside of fixed income Source: Clearwater Analytics

 

Did firms that pivoted in their strategies get lucky? Or do top performers tend to be consistent in their strong returns? The answer is a qualified yes: more than half of the top performing group in 2023 had above median results in 2024, and more than 80% of them have again outperformed so far in 2025.

Figure 2: 1-year total return for 2023, 2024, 2025, grouped by performance. Note: For Clearwater corporate clients with >$50M in assets, <= 90% allocated to cash (and equivalents), <=10% allocated to equities, with extreme outliers removed. 2025 performance through 5/2025 is annualized. Source: Clearwater Analytics

 

For these leading corporate investors, moving early was not the only successful investment strategy. Much of the pivot was to corporate bonds, not just Treasuries, based on median asset allocation numbers.

Figure 3: Asset allocation mix of the top corporate performers of 2023. Note: *and equivalent. Annual averages of monthly distribution for 2023’s top 10% of performers (65 firms, see p.9 for more details). Source: Clearwater Analytics.

 

While first-movers have outperformed, today across Clearwater’s database, median portfolio durations are now the highest they have been in several years, roughly doubling from a low in 2023. As the Fed raised rates and then held steady until September 2024, firms went farther out on the curve, locking in longer-term yields.

Figure 4: Portfolio duration and Fed funds rate, 2020 – 2025. Note: *time-to-maturity weighted by market value of holdings. For clients with $50M+ in assets under management and <=90% allocated to cash. Data through 5/2025. Source: Clearwater Analytics, FRED

 

As short rates started to fall in late 2024, many corporates shifted further from cash into bonds, expecting additional cuts. But the Fed has held rates higher than expected, as the economy has proven resilient. As a result, some firms have flip-flopped with their cash strategies (see net flows below). With some weakness in recent macro data, however, firms might very well reverse course again.

Figure 5: Net flows to cash and implied Fed funds rate. Note: For clients with $50M+ in assets under management. And <=90% allocated to cash. Excludes extreme outliers. Source: Clearwater Analytics, Bloomberg

 

Download the full report

If you are interested in the details of this analysis and additional insight on corporate treasuries and investments, download our Midyear macro update for corporates | The economy that wants to hang on.

About the research

This midyear macro update for corporates is based on a comprehensive review of the recent history of corporate investment performance, using Clearwater’s proprietary data. Data from about 800 corporate clients, with a combined $1.3 trillion in assets, was anonymized, analyzed, and compared for statistics such as total returns, asset allocations, and net flows.

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