10 June 2005
Foundation trusts should look for a safe harbour when investing short-term cash surpluses, their regulator said last week.
Foundations would generate cash that was not needed immediately but would be required within 12 months, said Monitor. Its consultation document on how to make the most from surpluses says trusts should limit themselves to investments rated at the highest level by agencies such as Standard & Poor's.
'Safe harbour' investments, such as cash deposits and government and local authority bonds, would be low risk and offer access to funds at short notice, the report says. Individual investments generally should not exceed 20% of total investments or £5m, whichever is greater.
Equities, derivatives, hedge funds and foreign exchange deals would be excluded (though the latter was permissible if it minimised risk).
Sector Healthcare executive director Gary Lawson said the document was a good starting point but lacked detail.
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