They have their eyes on your cash and they think they can do a better job with it than you can. Who are they? The investment managers, the custodians, bankers and the fund managers who are offering specialist cash services and products.

In London, major money manager Gartmore, part of the NatWest group, looks after a cash mountain of £3.5bn ($5.4bn). Head of cash management David Hynes says Gartmore is finding increasing interest among clients in using outside investment management. If you have enough cash, having it professionally managed makes an awful lot of sense." He adds: "The consultants are beginning to focus on cash as a separate asset class."

Erika Arevuo, vice president in charge of global cash management at State Street in London echoes this interest among clients to have cash handled separately. "They are looking for their cash to work a little bit harder for them. What happens is largely determined by the client in so far as they appoint an asset manager or custodian. If the client wants the custodian to manage the cash, we provide a fully integrated set of capabilities."

And, at Citibank Global Asset Management (CGAM), senior liquidity manager Mark Hannam says that the bank has a strongly targeted strategy for its cash management for corporate customers and its asset management businesses, which gives it an advantage over fund managers.

You can, of course, do it yourself. Citibank's treasury department has studied the cost of handling cash management transactions. Hannam says: "It is not an inconsiderable sum at about $100 a ticket and if you are going to do that every day of the year it starts to build up. So cutting down these costs is an attractive proposition."

Gartmore's Hynes says: "If you have £20m cash to manage, you may be able to do as good a job as a fund manager. But it could cost you more to do this than to farm it out to a professional."

Arevuo says she has seen an increasing interest in custodial management of cash in the past two years, though investment managers still predominate. Even clients who manage their cash transactions themselves may not have the resources to manage the income from portfolios, which the custodian will manage through its cash administration services.

As Hannam at CGAM puts it: "People who spend all their day thinking about money market investments are likely to be better than people for whom it is only part of their job. We think there is value to be added."

State Street says cash can be managed passively through cash pooling, sweeping or interest-tiering arrangements. The bank will set up an advance agreement on an investment formula. "We do not take any discretionary authority for those cash investments," says Arevuo. "We will know in advance that certain funds are earmarked for deposit, money market funds, repo or other."

Another service is a multi-currency cash administration service for pension fund cash that is not allocated to a manager, but used for portfolio redistribution or rebalancing.

Of the £3.2bn cash that Gartmore handles,£1.8bn is for bespoke cash management accounts, where clients come seeking specialised cash management services. "The balance is in our special deposit accounts which we currently use for managing balanced pension fund portfolio accounts." These accounts are managed with very low market risk, investing in very short-term securities, mainly fixed deposits and some certificates of deposit, he explains. This money can be cyclical, depending on the state of the investment markets.

Hynes divides the bespoke clients into four groupings. The first group stipulates a maximum security length of 90 days, with A1 or B1 credit or better, and a benchmark typically of one-month Libid. "We would normally try to get an outperformance of five to 10 basis points." The second group would allow up to one-year maturities, using the top 200 banks and a benchmark of three-month Libid.

The other two groups have a five-year horizon and could be regarded as "quasi-bond accounts", he says. The difference between the two is that one is confined to domestic assets, while the other can look to opportunities abroad in global bonds. In effect these accounts have a dual benchmark, says Hynes. "Bond benchmarks when bonds are rallying and cash when bonds are falling."

In Gartmore's approach to managing cash as separate asset class, there is no room for using derivatives or other instruments. The use of foreign currency is limited to the forays into international bonds, done on a hedged basis. Swaps he sees as something of more interest to corporate treasury departments. "Our view is that cash is the risk-free asset class."

The joint launch with NatWest of its sterling money market fund represents, Hynes believes, the group's next step forward in the service offered to its own clients, as well as attracting a wider market. For one thing, the fund carries a rating, while the special deposit accounts do not, he points out. "On the yield side we expect it to be slightly more favourable, because the new fund holdings will probably be about 10 days longer than those in the SDAs. This could enable you to pick up an extra five to 15bps."

At CGAM, while tailored cash management services are on offer to larger clients, its range of money market funds are now on offer, virtually across Europe. "They generate a money market return higher than overnight deposit with a little less volatility," says Hannam. "They give people a lot of flexibility with low operation and administrative costs."

Money market funds are very much part of the array of services at State Street. The multi-currency short-term investment vehicle (MCIV) is designed to replicate foreign currency money market funds. Arevuo says an investor can hold foreign currency through an automated dollar swap programme and thence in a US money market fund. She adds: "The return is equivalent to the return on the money market fund, plus or minus the return on the swap, providing foreign currency investment at a very competitive rate."

Longer term, Hannam sees the European market as fast catching up on the US. Much of the spur to the market will come in his view from the single currency. "The single currency will give us a very deep, very liquid money market in Europe with many of the same characteristics as the dollar markets in terms of how they issue, maturity profiles, credit pricing and so on," he says."