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President's Perspective
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CalTRUST Government Money Market Fund Continues To Be a Favorite For CalTRUST Investors
The addition of the CalTRUST Government Money Market Fun (MMF) to the CalTRUST line-up of investment options in late-2015 proved to be extremely popular at the time - and continues to be today. This popularity can be traced to the Government MMF's:
- Stable $1.00 net asset value per share (dollar in-dollar out);
- Same-day liquidity for purchases and redemption requests received by 1 pm PT;
- "AAAm" and "Aaa" ratings from S&P and Moody's, respectively;
- Highly competitive money market rates, and a history of superior performance (see chart in upper right-hand column);
- Best available expense ratio of only 16 basis points (0.16%); and
- Full compliance with all provisions of Rule 2a(7) governing SEC-registered MMFs.
When utilized in concert with the CalTRUST Heritage MMF and the CalTRUST Short- and Medium-Term funds, the Government MMF give investors the ability to allocate their assets across the 0-5 year fixed-income spectrum, and maintain maximum flexibility in meeting local cash flow needs and changing circumstances.
Reminder: CalTRUST Trade Deadlines
CalTRUST Short-Term Fund
- Notice will be considered given on a particular Business Day if received by the Fund Accountant before 1:00 p.m. Pacific time; otherwise it will be considered given on the next Business Day. Funds will be considered delivered on a particular Business Day if the wire is received by the Custodian before 1:00 p.m. Pacific time, otherwise funds will be considered delivered on the next Business Day.
CalTRUST Medium-Term Fund
- Funds may be invested in the Medium-Term Fund weekly on the Wednesday of each week or on the last Business Day of the month; provided, however, that the Fund Accountant receives prior notice of the investment by 1:00 p.m. Pacific Time on the preceding Tuesday and the Custodian receives a Federal Reserve wire or bank wire convertible to Federal Funds on a same-day basis (i.e., on or before the investment date).
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In any particular month, if a Participant gives late notice or transmits late
funds (i.e., the Fund Accountant receives notice of the investment after 1:00 p.m.
on the preceding Tuesday or the Custodian receives the funds after the specified
investment date), then from the Business Day on which funds are received until
the following Wednesday, such funds shall be automatically invested in the
Short-Term Fund.
CalTRUST Government Money Market Fund & CalTRUST Heritage Money Market Fund
- Notice will be considered given on a particular Business Day if received by the Administrator before 1:00 p.m. Pacific time; otherwise it will be considered given on the next Business Day. Funds will be considered delivered on a particular Business Day if the wire is received by the Custodian before 1:00 p.m. Pacific time, otherwise funds will be considered delivered on the next Business Day.
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 |
Chuck Lomeli is CalTRUST President
and Solano County Treasurer
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Financial Markets Update
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The "Bear Market In Bonds" This Time Is Not Likely To Resemble That Of The 1970s
When investors hear "bear market in bonds" it conjures images of the brutal market of the 1970s, ending with the yield on the 10-Year Treasury at 15.5% in 1981. Back then, bonds took on the derisive label of "certificates of confiscation", as long-term bond prices fell so steeply that investors felt their portfolios had been confiscated.
In his most recent posting to
Advantage Voice
, Jim Kochan, Fixed Income Strategist with Wells Fargo Asset Management,
discusses why today's bear market in bonds - if, indeed that is what we are entering - is unlikely to be a replay of that disastrous period for bond investors.
As Jim points out, the
dissimilarities
to the 1970s are striking, as it took more than a decade of mistaken fiscal and monetary policies to produce the 70s bear market:
- Oil prices tripled in the mid-s70s, then tripled again in 1979;
- The Fed 'accommodated' those increases, allowing money supply growth to hit 12%-14% per year (versus 7%-8% today); while
- Unit labor costs grew 6%-8% per year (versus 1%-2% today).
Today's "bear market" is likely to reflect today's 'conditions on the ground', such as relatively subdued inflation and nominal GDP growth. As such, Jim points to the FOMC projections of a Fed funds rate of 1.5% at this time in 2018, around 2% in 2019, and moving toward 3% over the long-term - not the negative returns seen in the 1970s.
In short, as Jim puts it, the term "bear market" should not be a substitute for thinking.
Jim's complete
blog post
can be accessed
here.
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CalTRUST Portfolio Snapshot (as of January 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
April 13, 2017
Good Friday Observed
Early Closure - 11:00 am PST
April 14, 2017
Good Friday Observed
Closed for Trading
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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