What's NEW in the Investments Arena?
March 2019

Being a NEW member of the Visible Equity family on our product team, I’m super excited about my NEW experiences here and all the NEW things to come. It’s the season of NEW, it seems!

Over the last few months as I have been thinking about Visible Equity’s NEW baby, our very own Investment Analytics Module (coming soon!), it made me ponder about how an individual financial institution deploys the assets at its disposal.

For this article, I narrowed my scope to credit unions to understand the landscape there. As I kept peeling the layers further, I discovered some neat facts. When you look at the overall financial landscape of all the credit unions in the country (over a 10-year period), their total asset makeup largely constitutes of loans and investments. About 60-75 percent of credit unions’ total assets are extended in the form of loans (chart below). Essentially what this means is that the majority of the community’s deposits are deployed back into the community in the form of loans. On the other hand, when you glance into the industry’s aggregate investment portfolio, it has generally teetered around 18-27 percent of their total assets.

Over the last five years though, we can visibly see a slow, steady decline in the credit unions’ total investments portfolio, as a percentage of their total assets (chart below).  There are various macroeconomic factors involved in this trend—we will have to save that topic for another day!

A financial institution generally tries to manage their investment portfolio to maintain liquidity and keep risk levels low, all while trying to optimize returns. The constant tugging of these opposing objectives makes it a challenging process!  Institutions that are better able to analyze and visualize their investment portfolio and the associated future cash flow, including managing unrealized gains and losses, can make this whole process less cumbersome.

As we peek into the bright horizon ahead for our NEW baby, we are excited to see how Visible Equity’s Investment Analytics Module can help institutions better analyze their data and effectively manage the competing objectives of liquidity, risk, and return.

- Brinda Jaikumar, Product Director  

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