September 2016                                                                                                                                                         Volume 12 - Number 9

Monthly Market Update

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






 President's Perspective
CalTRUST Updates

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
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
Financial Markets Update
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.
CalTRUST Portfolio Snapshot (as of August 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 Government & Heritage Money Market Funds
Treasury Yield Curve 


2016 Calendar

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.