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President's Perspective
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The Fall Meeting of the CalTRUST Board of Trustees was held this month in Santa Barbara County. Items of business considered at the meeting included updates from each of the business partners, a review of the fiscal-year-end 2015-16 financial position, CalTRUST committees, and the current economic environment. The CalTRUST Board is pleased with the stability and success of CalTRUST as we are over 160 participants strong with assets in excess of $2.5 billion.
Also this month, CalTRUST staff contacted all active participants to verify that we have current information for your account contacts and signatories; provide information on how to register to access our online trading platform; and introduce the newest CalTRUST Member Services Associate, Kyle Tanaka. If you still need to verify/confirm your information please contact Kyle at (916) 650-8114.
SEC Reforms Affecting CalTRUST Heritage MMF Take Effect In Mid-October; CalTRUST Government MMF Offers Stable Value
In July of 2014 the SEC adopted major structural changes to Rule 2a-7 of the Investment Company Act of 1940, which 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 October 14
th
:
- Require prime institutional MMFs to transact at a variable, or "floating" NAV, rather than the traditional $1.00 share price;
- 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 ratio in Select Class shares; and
- Full compliance with all provisions of Rule 2a-7 governing SEC-registered MMFs.
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 Economy - Not Presidential Elections - Affects the Bond Markets
In his recent
AdvantageVoice
blog post, Brian Jacobsen, Chief Portfolio Strategist at Wells Fargo Funds Management, LLC, analyzes how bonds have performed in election years versus non-election years, and finds that most of the fixed-income market's good and bad times historically have been driven by everything
but
the presidential election.
Brian tracked the price return on corporate bonds and 1, 5, and 10-Year US Treasuries in the 75 days before and after the Tuesday following the first Monday in November (election day every fourth year) since 1916. Overall, in inflation-adjusted terms, election-year returns on corporate bonds were 0.6% while non-election-year returns were 0.4%. A similar story holds for Treasury returns.
While Brian admits that politics can have an impact on the market, he finds that the majority of fixed-income moves during election years - just as in non-election years - had non-election drivers, such as:
Quickly accelerating inflation expectations, in 1956, 1968, and 1984;
A zealous (perhaps over-zealous) Fed, in 1988; or t
he onset of the financial crisis in the Fall of 2008.
Claims that one candidate or the other would lead to reckless spending and/or financial ruin have not seemed to faze the markets. On the other hand, fears of inflation and looming recessions - each as likely to arise in non-election-years as in election-years - have been more consequential in determining the direction of the market.
Brian's complete
blog post
can be accessed
here.
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CalTRUST Portfolio Snapshot (as of August 31, 2016)
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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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2016 Calendar
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October 10 Columbus Day Closed for Trading November 11 Veterans Day Closed for Trading November 24 Thanksgiving 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 |
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