February 2016                                                                                                                                                   Volume 12 - Number 2

Monthly Market Update

In This Issue
(click on logo to link to website)







President's Perspective

CalTRUST Funds Offer A Great Solution For Agencies Faced With Increased Bank Deposit Regulations


If it has not happened to you, chances are you have heard of it happening to someone near you: ever tighter bank regulations are prompting many banks to actively discourage large local agency deposit balances. Some are reducing their ECR - earnings credit rate - on deposit balances; others are charging for large deposits; while still others are "inviting" local agencies to find another bank. 


Developments of this sort serve to highlight the value which the CalTRUST funds provide to California local agencies. An increasing number of agencies are turning to the CalTRUST funds for: 

  • Liquidity - Same-day liquidity in the CalTRUST Government and CalTRUST Heritage MMFs, next-day in the CalTRUST Short-Term Fund, and monthly in the CalTRUST Medium-Term Fund; 
  • Solid Credit Ratings - "AAAm" and "Aaa" by S&P and Moody's, respectively, on the Government MMF and Heritage MMF, and "AAf" by S&P on the Short-Term Fund; 
  • Cost Efficiency - The cost efficiency of highly diversified pools, with no wire or transaction charges, no account maintenance fees or minimum balance requirements; and 
  • Flexibility - Multiple account options available, with no minimum or maximum transaction size, and the ability to reallocate between funds at no cost as local circumstances dictate.  
CalTRUST Updates


The CalTRUST Board of Trustees will hold their Annual Meeting in Riverside County on April 27, 2016.  If you have any items you would like the Board to consider or if you would like to attend the meeting please contact Laura Labanieh at 916.650.8186 or llabanieh@csacfinancecorp.org


In March, CalTRUST staff will be reaching out to all participants to verify that we have current information for your account contacts and signatories.  We will also include information on how to make your CalTRUST experience even easier with online trading.  If you would like to get started with online trading today please complete this form or contact Erin Carthen at 916.440.4888.  

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,  
Chairman of the Board of Trustees
and Solano County Treasurer
Financial Markets Update
BOJ Negative Interest Rate Policy Could Boost Growth In US


In his latest Economic Analysis, Brian Jacobsen, Chief Portfolio Strategist at Wells Fargo Funds Management, discusses how the Bank of Japan's (BOJ) recently announced negative deposit rate could be a positive growth driver not only in Japan, but also in the US. 

The motivation behind the BOJ's negative interest rate policy is to punish Japanese banks for holding reserves instead of lending them out. This has been a chronic problem in Japan for over 25 years, as central bank policy - various forms of quantitative easing - have failed to generate growth in business and household lending. Brian notes that since 2007, Japan's monetary base has grown by over 280%, yet bank lending has grown by only 10%. 

In Brian's view, the BOJ's move should: 
  • Help Japanese companies, particularly smaller firms more dependent upon bank lending; 
  • Reinforce the European Central Bank's move to a negative interest rate policy, by more firmly anchoring low yields; and 
  • Make it even more difficult for the Fed to increase its target rate - since relative interest rates are more important than the absolute level of rates - keeping US monetary policy looser for longer, which should be good for growth. 

 Brian points out that "setting monetary policy is a lot of learning by doing". In that vein, he concludes that, if nothing else, the BOJ's negative interest rate policy is "better than doing the same old thing and simply praying for a different result."  

The complete Economic Analysis can be accessed here. 
CalTRUST Portfolio Snapshot (as of January 31, 2016)
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.
CalTRUST Heritage Money Market Fund


Treasury Yield Curve 


2016 Calendar

March 24

Good Friday Observed

Early Closure - 10:00 am PST


March 25

Good Friday

Closed for Trading

May 27

Memorial Day Observed

Early Closure - 10:00 am PST


May 30

Memorial Day

Closed for Trading


July 1 

Independence Day Observed

Early Closure - 10:00 am PST


July 4

Independence Day Observed

Closed for Trading


September 5

Labor Day

Closed for Trading


October 10

Columbus Day

Closed for Trading


November 11

Veterans Day

Closed for Trading


November 24


Closed for Trading


November 25

Thanksgiving Holiday

Early Closure - 10:00 am PST


December 23 Observed

Christmas Eve

Early Closure - 10:00 am PST


December 26

Christmas Observed

Closed for Trading


December 30

New Year's Eve Observed

Early Closure - 10:00 am PST


January 2, 2016

New Year's Day Observed

Closed for Trading


The CalTRUST Monthly Market Update  is prepared monthly by the Investment Trust of California (CalTRUST) for participants in the CalTRUST Joint Powers Authority pooled investment program.  The Newsletter is prepared solely for informational purposes and is not to be construed as the solicitation of an offer to sell or of an offer to buy any security, nor is it intended to constitute a recommendation for the purchase or sale of any security.  The information contained herein is based upon data obtained from sources believed to be reliable, but is not guaranteed by us as being accurate and does not purport to be a complete summary of the available data.  Additional data will be provided upon request. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance.  Information, opinions and estimates contained in the Monthly Market Update reflect a judgment at its preparation date by CalTRUST and are subject to change without notice.  The price, value of, and income from any securities or financial instruments issued by the entities mentioned in this Monthly Market Update may fall as well as rise.