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CalTRUST Announcements
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The CalTRUST Board of Trustees held their Annual Meeting on April 19, 2017. At this meeting, the Board considered a number of important issues including the appointment of a new President of the Board. The Board elected Dan McAllister, San Diego County Treasurer-Tax Collector, as the new President of CalTRUST.
One of the major focuses of this year's CalTRUST Annual Meeting was the consideration of partners to provide custody, investment management, and fund accounting services. In February of this year, CalTRUST issued Requests for Proposals (RFPs) for their custody, investment management, and fund accounting Services. CalTRUST received multiple responses to each RFP and a thorough review process of all proposals was conducted by the CalTRUST Product Review Committee. During the Annual Meeting, the CalTRUST Board of Trustees took action to select providers for each of the services that were put to bid. The CalTRUST Board of Trustees voted to select
U.S. Bank to provide custody services,
BlackRock to provide investment management services, and
NorthStar Financial Services Group, LLC to provide fund accounting services. These selections are all pending final contract review and approval. We understand that these are all critical functions of CalTRUST and want to ensure participants that they will all be transitioned in a thoughtful manner over the course of the summer. More information will be provided shortly on these changes and the implementation timelines. In the meantime, if you have any questions, please do not hesitate to contact Laura Labanieh at 916.650.8186 or
laura@caltrust.org.
CalTRUST Offers Safe & Convenient Diversification Tool
In real estate, it's "location, location, location". Similarly, in public investing it's "diversification, diversification, diversification". In short, no matter how risk-free an individual security may seem, or how well it has performed in the past - don't put all of your eggs in one basket.
The CalTRUST funds provide a safe and convenient means for local agencies to diversify their investment portfolios. The CalTRUST Government Money Market Fund (MMF), rated "AAAm" and "Aaa-mf" by S&P and Moody's, respectively, offers same-day liquidity and a stable $1.00 share price. The CalTRUST Heritage MMF, also rated "AAAm" and "Aaa-mf", also provides same-day liquidity. The CalTRUST Short-Term Fund, rated "Aaf/S1+" by S&P offers next-day liquidity and has produced net returns in excess of LAIF since its inception over 12 years ago. Finally, for those funds with a longer investment horizon - 2-3 years or more - the CalTRUST Medium-Term Fund, rated "A+/S1" by S&P, can provide an appreciable increase in monthly income, while maintaining weekly liquidity.
To date, over 275 California public agencies have concluded that, taken together, the CalTRUST funds offer a cost-efficient, convenient means of improving overall portfolio performance while simultaneously increasing the diversification of their portfolio.
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
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Norman Coppinger
League of CA Cities |
(916) 658-8277 |
Neil McCormick
CA Special Districts Association |
(916) 442-7887 |
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Financial Markets Update
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Convergence Of Private-Sector & Government Borrowing Could Push Rates Higher Later This Year And Into 2018
In his late-March
Advantage Voice
blog post
, Wells Fargo Investment Strategist James Kochan, looks at why interest rates have remained so low for so long, and whether conditions may be changing. As to why rates have remained so low, Jim points to the
lack of demand for credit
so far in this expansion, with growth of capital markets borrowing averaging only 4%, versus the double-digit rates seen in cyclical expansions of the 1970s and '80s.
The major culprit behind the lack of demand in this expansion - mortgage credit. Mortgage debt outstanding actually declined between 2009 and 2014, and is averaging only 2% since 2014. Borrowing by the corporate and the governmental (federal, state and local) sectors has been "less than robust" as well, and certainly insufficient to make up for the lack of mortgage credit demand.
Looking forward, even if mortgage credit demand picks up modestly and household and corporate borrowing continue to increase relatively slowly, inflation is likely to remain in check.
On the other hand, if a substantial increase federal fiscal stimulus - think defense and infrastructure spending, and revenue-negative tax cuts - is layered on top, rates could move up. Typically, federal government borrowing increases during recessions, not well into a cyclical expansion. If, instead, government borrowing accelerates while private-sector borrowing is increasing - a possibility for later this year and 2018 - pressures on rates could intensify significantly.
Jim's complete
blog post
can be accessed
here.
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CalTRUST Portfolio Snapshot (as of March 31, 2017)
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1. CalTRUST Short-Term and Medium-Term and LAIF yields are net of fees. Merrill 1-5 Year Indexes are unmanaged; and do not reflect any deduction for administrative fees or expenses.
2. CalTRUST and LAIF returns are net of all investment advisor, administrative and program fees.
3. Annualized.
4. The CalTRUST Short-Term and Medium-Term portfolios commenced operations on February 13, 2005.
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CalTRUST Government & Heritage Money Market Funds
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Treasury Yield Curve
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2017 Calendar
May 26, 2017
Memorial Day Observed
Early Closure - 11:00 am PST
May 29, 2017
Memorial Day Observed
Closed for Trading
July 3, 2017
Independence Day Observed
Early Closure - 10:00 am PST
July 4, 2017
Independence Day Observed
Closed for Trading
September 4, 2017
Labor Day Observed
Closed for Trading
October 9, 2017
Columbus Day Observed
Bond Market Closed for Trading
November 23, 2017
Thanksgiving Day Observed
Closed for Trading
November 24, 2017
Thanksgiving Day Observed
Early Closure - 10:00 am PST
December 22, 2017
Christmas
Observed
Bond Market Early Closure - 11:00 am PST
December 25, 2017
Christmas Observed
Closed for Trading
December 29, 2017
New Year's Eve Observed
Bond Market Early Closure - 11:00 am PST
2018 Calendar
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January 1, 2018
New Year's Day Observed
Closed for Trading
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