Fitch Q2'19 LGIP Update
Earlier this week, Fitch Ratings published a "Local Government Investment Pools: 2Q19" report. They tell us, "Both Fitch Ratings' Local Government Investment Pool (LGIP) indices saw modest increases in assets during 2Q19. Inflows during the period were likely due to additional cash receipts from seasonal tax collections. On a year-over-year basis, assets in the Fitch Liquidity LGIP Index and Fitch Short Term LGIP Index increased 16% and 9%, respectively, to $172 billion and $78 billion." Fitch also writes, "Yields in the short-term markets fell across the curve during the second quarter due to global growth concerns, U.S./China trade war uncertainty, and an expected interest rate cut by the Federal Reserve. As a result, LGIP net yields fell slightly during the period, by 5 to 6 basis points for both Fitch indices, a reversal from several years of a steady upward trend." The brief shows the Fitch Liquidity LGIP Index's Average Net Yield at 1.96% as of June 2019 compared to our Crane Taxable Institutional Money Fund Average's 2.12%. They show the Fitch Short-Term LGIP Index's Average Net Yield at 2.34% as of June 2019 compared to a Blended Crane Short-Term Bond Fund Index's 2.60% Yield. Fitch adds, "As a result of expectations for low interest rates, LGIPs in Fitch's Short-Term Index slightly extended duration to sustain yields. Duration stood at 1.02 years at 2Q19, up from 0.97 years at 1Q19. The weighted average maturity (WAM) for the Fitch Liquidity LGIP Index remained steady at 42 days."
