The Public Funds Investment Institute recently posted an update entitled, "A New LGIP in Georgia." Subtitled, "Georgia Will Roll Out a Prime LGIP Portfolio," it says, "The Georgia Treasurer is rolling out a new LGIP for local governments that will include credit-backed money market securities in its portfolio with the objective of producing a higher yield than its existing government portfolio (Georgia Fund 1). The offering, Georgia Fund 1 Prime, has a couple of unusual dimensions: A depositor representative of a local government must undergo mandatory training before investing funds in the prime pool; and, It is part of a program that will offer both government and prime fund options."
They state, "Georgia Fund 1 Prime is set to open December 4. It will be managed as a stable net asset fund with 30% invested in credit instruments (high grade commercial paper, corporate obligations, and negotiable certificates of deposit) and the balance in government obligations (including repurchase agreements). State Treasury staff expect the new portfolio will offer an enhanced yield as compensation for the risk associated with investing in credit-backed instruments. Risk management elements include limiting the maximum weighted average maturity of the new fund to 60 days, limiting credit exposure to 30% of its assets, and employing an external investment manager. The new portfolio is expected to maintain a rating of AAAmmf from Fitch Ratings."
The piece continues, "Federated Hermes will manage the new fund with oversight by the State Treasurer. The existing Georgia Fund 1 is managed internally. Treasury decided to use an external manager to bring extensive credit review/management resources to supplement the smaller, internal staff that manage and administer the government-oriented fund. The new portfolio will operate with an expense ratio of 5.5 basis points (the same as the existing portfolio). Treasury staff that conducted an RFP for the external manager were 'surprised at how aggressive the bids were.'"
It says, "State Treasurer Steve McCoy is a long-time advocate of investment training. Before investing funds in the new offering, at least one depositor representative of a local government will have to undergo training on investment risks and operations. The mandatory two-hour training as a pre-requisite for using the new fund is unusual and may be unique in the LGIP space. The training will be split between risk/liquidity issues and operations issues (Federated will provide client service and operations for the new portfolio, while the State Treasury provides these services for Georgia Fund 1)."
Author Marty Margolis explains, "The Georgia Treasury currently has three pooled programs, including two with credit-based investments, but until now local governments were permitted only to invest in the government-oriented Georgia Fund 1 portfolio. As of June 30, 2023, Georgia Fund 1 had assets of $30.7 billion, with about 10% in bank demand deposits and the balance in government obligations. About 58% of its assets were local government assets; the balance was state and state agency funds."
He adds, "LGIPs that offer both a government and a prime series are unusual, but not unheard of. Most sponsors apply a single investment policy to their portfolios. But TexPool, the State's $42 billion LGIP, Texas CLASS, a $23 billion pool, Colotrust, a $14 billion LGIP in Colorado, and Pennsylvania's $11 billion PLGIT, offer both government and prime options."
For more on LGIPs, or Local Government Investment Pools, see these Crane Data News stories: "LGIP Assets Lower in Q3 Says Fitch" (12/1/23); "S&P Global Updates on US MMFs, European MMFS, LGIPs Show Cash Is Hot" (8/4/23); and, "Federated Hermes Talks Record Assets, LGIPs, ETFs and More on Q1 Call" (5/1/23).
In other news, Crane Data published its latest Weekly Money Fund Portfolio Holdings statistics Tuesday, which track a shifting subset of our monthly Portfolio Holdings collection. The most recent cut (with data as of December 1) includes Holdings information from 53 money funds (down 21 from a week ago), or $2.527 trillion (down from $3.012 trillion) of the $6.253 trillion in total money fund assets (or 40.4%) tracked by Crane Data. (Our Weekly MFPH are e-mail only and aren't available on the website. See our latest Monthly Money Fund Portfolio Holdings here.)
Our latest Weekly MFPH Composition summary shows Government assets dominating the holdings list with Repurchase Agreements (Repo) totaling $1.051 trillion (down from $1.242 trillion a week ago), or 41.6%; Treasuries totaling $993.9 billion (down from $1.147 trillion a week ago), or 39.3%, and Government Agency securities totaling $243.1 billion (down from $290.8 billion), or 9.6%. Commercial Paper (CP) totaled $84.8 billion (down from a week ago at $108.6 billion), or 3.4%. Certificates of Deposit (CDs) totaled $68.7 billion (down from $90.8 billion a week ago), or 2.7%. The Other category accounted for $58.6 billion or 2.3%, while VRDNs accounted for $26.8 billion, or 1.1%.
The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $993.9 billion (39.3% of total holdings), the Federal Reserve Bank of New York with $248.1 billion (9.8%), Fixed Income Clearing Corp with $217.6B (8.6%), Federal Home Loan Bank with $185.5B (7.3%), RBC with $58.7B (2.3%), JP Morgan with $50.0B (2.0%), Goldman Sachs with $48.7B (1.9%), Federal Farm Credit Bank with $48.5B (1.9%), BNP Paribas with $42.9B (1.7%) and Citi with $42.7B (1.7%).
The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($268.9B), Goldman Sachs FS Govt ($249.4B), Fidelity Inv MM: Govt Port ($187.2B), JPMorgan 100% US Treas MMkt ($177.9B), Morgan Stanley Inst Liq Govt ($144.3B), State Street Inst US Govt ($128.0B), Allspring Govt MM ($122.5B), Fidelity Inv MM: MM Port ($119.4B), Dreyfus Govt Cash Mgmt ($103.9B) and Goldman Sachs FS Treas Instruments ($85.0B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary.)
