President's Perspective
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CalTRUST Updates
The Annual Meeting of the CalTRUST Board of Trustees was held today in Riverside County.
Items of business considered at the meeting included updates from each of the business partners, a review of the current information statement and investment policy, the 2016-17 budget, and the current economic environment.
In order to make CalTRUST an available option for all agencies, large and small, the Board voted to remove the $250,000 minimum investment threshold. This allows smaller agencies and special districts easier access to participate in CalTRUST.
Further, the Board adjusted the liquidity in the Medium-Term Fund to weekly. Whereas previously purchases and redemptions were only allowed on the last business day of the month; purchases and redemptions can now be made on the Wednesday of each week with five days notice.
As the Medium-Term Fund has grown, the CalTRUST Board of Trustees sees value in having it rated, as is the Short-Term Fund, Money Market Fund, and Government Fund. A rating on the Medium-Term Fund will further the transparency of our program. As such, a rating will now be obtained for the Medium-Term Fund.
With Money Market Reform Implementation Deadline Nearing, CalTRUST Government MMF Offers Stable Value Option
SEC-adopted money market reforms will alter the manner in which prime institutional money market funds (MMFs), such as the CalTRUST Heritage MMF, operate. The new rules, which take full-effect in October of this year:
- Require prime institutional funds to transact at a "floating" NAV, rather than the traditional $1.00 share price; and
- Authorize prime institutional MMF Boards to impose redemption gates and fees in times of market illiquidity.
In response to these changes, the CalTRUST Board worked with our investment advisor, Wells Fargo Asset Management, to provide an investment option with a stable NAV and same-day liquidity. The CalTRUST Government MMF gives local agency investors:
- A stable $1.00 NAV, with no redemption gates or fees;
- Same-day liquidity for purchases and redemptions until 1 pm PT; "AAAm" and "Aaa-m" ratings from S&P and Moody's, respectively;
- Highly competitive money market rates;
- Best available expense ration in Select Class shares; and
- Full compliance with all provisions of Rule 2a-(7) governing SEC-registered money market funds.
This last point is worth emphasizing since not all funds being marketed to California local agencies as money market funds - or 'money market-like' funds - are fully compliant with all provisions of Rule 2a-(7).
For
more information on the CalTRUST funds, please contact me by email at the address listed below, or contact:
Lyle Defenbaugh, Wells Fargo Asset Management 916-440-4890
Laura Labanieh, CSAC Finance Corporation 916-650-8186
Norman Coppinger, League of CA Cities 916-658-8277
Neil McCormick, CA Special Districts Association 916-442-7887
Chuck Lomeli is CalTRUST President
and Solano County Treasurer
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