DALLAS – April brought a lot more than rain showers as credit unions saw a number of encouraging signs that the economy is turning around including more jobs and more consumer spending even as interest rates continued their upward climb. Those factors have led to some credit unions readjusting their investment holdings with many relying on cash as they watch from the sidelines on how much higher interest rates will go. "The cost of staying in cash has become greater and credit unions tend to do this when rates go up," said Brian Turner, manager of investment advisory at Southwest Corporate Federal Credit Union. "The bottom line is don't sacrifice cash flow for more basis points. We don't want an environment like the one in 1994″ with extreme net operating cash flows. Turner said that by not chasing yield, credit unions can manage the cash flow structure of their portfolios for future opportunities to invest. At WesCorp, balances are "pretty high" after seeing "lot of outflows" since April 15, said Dietmar Huesch, WesCorp vice president, Treasury and funding. "There's plenty of cash still out there. Credit unions can go out about five years max right now." Huesch said he's seeing fixed bullets, "old-fashioned" certificates and securities and credit unions not "grasping for yields at this point." "Our structured product has slowed down and the fixed product has a lot of yield curve," Huesch said. "Credit unions have been moving out and they probably should be moving out." ALM First Finanacial Advisors, LLC looks at the investment picture from the big balance sheet perspective, said Tom Manley, managing director, taking on a "defensive stance" to counter the recent growing payrolls and rise in interest rates. "As the market has rallied, we've bought stability through the use of bullets, started buying securities with optionality, bonds, more mortgage-backed securities and CMOs," Manley said. "As rates have increased, we've taken on a defensive posture." Manley said that defensive stance could change to a more aggressive position based on payroll growth, the price of oil and the aftermath of the Iraqi war and other international concerns. "These events might slow down the economy, the housing sector might be vulnerable," Manley said. "We're not there yet." Turner said Southwest Corporate has seen a substantial increase in its money market accounts over the past three years. That growth could potentially mean credit unions can go from overnight to term accounts. Huesch said like the typical consumer, credit unions tend to stay close to home during international turmoil when it comes to investments. "I may be in the minority saying this but I'm not sure Iraq matters a lot (regarding investments)," Huesch said. "Equities might get hit hard. But credit unions tend to be more conservative, blue-collar investors. They tend not to go out to very far." Manley said all external factors that affect credit union investments have caveats. "Nothing is done blindly, some credit unions might need more liquidity but looking at the entire balance sheet is the perspective we take," he said. [email protected]