Public Trust Advisors Blog

Top Economic Drivers of Increased Yield in 2017

Posted on Fri, Feb 23, 2018

We are two months into 2018 and experiencing steady growth from the prior year. Let’s look at the economic factors that impacted yields and recap a successful 2017. 

1. Three Federal Open Market Committee (FOMC) Rate Hikes

The Federal Funds target rate was raised three times (March, June, and December), starting the year at 0.50% to 0.75% and ending at 1.25% to 1.50%. The FOMC’s December dot plot indicated three potential rate hikes for 2018 based on the strength of the labor market and optimism that inflation will rise over the medium term.

2. Over Two Million Jobs Added in 2017

The unemployment rate dipped from 4.8% to 4.1% over the course of 2017. Non-farm payrolls added just over two million jobs in 2017, falling short of 2016’s growth but proving to be more than enough to put downward pressure on the unemployment rate and further tighten the labor market.

3. Stronger Economic Growth

The U.S. economy grew approximately 2.5% percent in 2017. Optimism regarding synchronized global growth and the impact of the Tax Cuts & Jobs Act have the markets optimistic that the U.S. economy can continue to grow at a healthy pace in 2018.

4. Positive Consumer Sentiment

Strength in the housing market, a tightening labor market, and record high stock prices have lifted consumer sentiment. With roughly two-thirds of the GDP derived from consumer spending, a healthy consumer has led to a healthy economy.

5. Low Market Volatility

With the FOMC striving for maximum transparency, the stock and bond markets remained remarkably calm over the course of 2017. Stability in the financial markets have made the FOMC’s job a bit easier (for now).

 


All comments and discussion presented are purely based on opinion and assumptions, not fact. These assumptions may or may not be correct based on foreseen and unforeseen events. The information above is not a recommendation to buy, sell, implement, or change any securities or investment strategy, function, or process. Any financial and/or investment decision should be made only after considerable research, consideration, and involvement with an experienced professional engaged for the specific purpose. Past performance is not an indication of future performance. Any financial and/or investment decision may incur losses. Performance comparisons will be affected by changes in interest rates. Investment returns fluctuate due to changes in market conditions.

Tags: Rising rates, Managing Public Funds, LGIP, Public Trust Advisors, FOMC, Short-term interest rates

2018 Operational Calendar

Posted on Fri, Feb 02, 2018

Public Trust Advisors, LLC Announces 2018 Operational Calendar 

2018 Operational Calendar V2-1.pngPublic Trust Advisors, LLC and the subsequent local government investment pools it manages will be closed on the following dates in observance of national holidays in 2018. Normal business hours will be resumed on the following business day. If you have any questions, please feel free to contact Public Trust Advisors at info@publictrustadvisors.com

Martin Luther King Jr Day
Monday, January 15, 2018

Independence Day
Wednesday, July 4, 2018
Veterans' Day (Observed)
Monday, November 12, 2018
Presidents' Day
Monday, February 19, 2018
Labor Day
Monday, September 3, 2018
Thanksgiving Day
Thursday, November 22, 2018
Memorial Day
Monday, May 28, 2018
Columbus Day
Monday, October 8, 2018

Christmas Day
Tuesday, December 25, 2018

 

Tags: Portfolio Management, 2018, LGIP, Public Trust Advisors, LGIP Administration

Special Report: Crane Data Interview 

Posted on Wed, Jan 17, 2018

Crane Data Interviews Palomba and Waud of Public Trust Advisors on LGIPs

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We are pleased to present a special report from Crane Data, publisher of Money Market Intelligence that collects and distributes money market and mutual fund news, information, and data. Earlier this month, Crane Data met with two of the Public Trust Advisors, LLC Portfolio Managers, Randy Palomba and Neil Waud, to discuss the management of local government investment pools and their outlooks for 2018. Click below to read the full interview. 

 

Click Here to Read the Full Interview

 

Any financial and/or investment decision should be made only after considerable research, consideration, and involvement with an experienced professional engaged for the specific purpose. Past performance is not an indication of future performance. Any financial and/or investment decision may incur losses.

Tags: Portfolio Management, Managing Public Funds, LGIP, LGIP Rates, The Fed, commercial paper, LGIP Administration, Local Government Investment Pools, Public Trust Advisors

Celebrating Five Years

Posted on Wed, Feb 22, 2017

Public Trust Celebrates Five Years of Service

Public Trust Advisors™ (Public Trust) investment management services for the public sector is celebrating five wonderful years of service and operation with the help of loyal Participants within eight (8) local government investment pools (LGIP)! Since 2012, Public Trust has been meeting the investment and/or administration needs of various local government entities, now totaling over 3,600 Participants nationally.*

We are growing together! It is thanks to the vision of the governing boards and the loyal and growing participants of the Public Trust-managed LGIPs that we have experienced exponential growth since 2012. As of January 31, 2017, Public Trust manages and/or administers LGIP assets totaling approximately $18 billion* across the eight LGIPs, comprised of eleven funds. Year-over-year, the firm has grown from just over $10 billion in LGIP assets under management and administration (January 2016) to $18 billion (January 2017), a total growth of 78%.

Returns vs SP Chart 12-31-16-1.png

The number of Public Trust-managed LGIP Participants continues to grow each year, contributing to the success of all. As of January 31, 2017, total Participants for Public Trust-managed LGIPs reached 3,645!* That’s a growth of approximately 8% within the last year alone. Whether you’ve recently joined or have been a long-term Participant, your continued participation is what makes us all grow together.

For the past five years, Public Trust Advisors has made it a priority to offer high quality, cost-efficient LGIP investment management services that rely on
people, technology, and proven processesThe Public Trust LGIP Administration System, a new generation, LGIP specific back-office system, allows us to operate effectively and efficiently. Our LGIP Investment Advisory services are LGIP-specific, with credit and portfolio management working together to safely manage the public’s funds while finding value. The result? Higher investment returns for Public Trust-managed LGIPs. See Figure One for our performance against Standard & Poor's rating.

As yields continue to rise, 2017 is shaping up to be a year of continued growth for our Participants. Look for new services and enhancements as we all grow together. In the meantime, we would like to hear from you and invite you to learn more about Public Trust.

Pool Breakdown 2017-2.png 

 Need more information? Contact Us!

*Participants comprised of both funded and non-funded accounts. Of the $18 billion, $1.4 billion is administration only for one LGIP comprised of one fund. Data as of January 31, 2017. All comments and discussion presented are purely based on opinion and assumptions, not fact. These assumptions may or may not be correct based on foreseen and unforeseen events. The information above is not a recommendation to buy, sell, implement, or change any securities or investment strategy, function, or process. Any financial and/or investment decision should be made only after considerable research, consideration, and involvement with an experienced professional engaged for the specific purpose. Past performance is not an indication of future performance. Any financial and/or investment decision may incur losses. A 'AAAm' rating by Standard and Poor's is obtained after S&P evaluates a number of factors, including credit quality, market price exposure, and management. Ratings are subject to change and do not remove market risk. **The benchmark, the S&P US AAA & AA Rated GIP All 30 Day Net Yield (LGIP30D), is a performance indicator of rated GIPs that maintain a stable net asset value of $1.00 per share and is an unmanaged market index representative of the LGIP universe. The S&P benchmark utilized in this comparison is a composite of all rated stable net asset value pools. GIPs in the index include only those rated based on Standard & Poor’s money market criteria. Pools rated ‘AAAm’ provide excellent safety and a superior capacity to maintain principal value while those rated ‘AAm’ offer very good safety and a strong capacity to maintain principal value (source: Standard and Poor’s website). The comparison between this index and the portfolio may differ in holdings, duration, and percentage composition of each holding. Such differences may account for variances in yield.

Tags: LGIP, yield, safety, investment advisor, LGIP Administration, Investing Public Funds, local government investment pool administration, investment managment for the public sector

Investing Bond Proceeds: Part Three

Posted on Wed, Dec 28, 2016

Part Three: Other Considerations for Investing Bond Proceeds

Creating a successful bond proceeds reinvestment program starts with structuring a strategy that adheres to your governing documents and risk tolerances while simultaneously accounting for the ever-changing nature of your project and the market. 

Arbitrage Rebate: IRS regulations set forth in Section 148(a) of the Internal Revenue Code were enacted to keep public entities from issuing bonds for reasons other than their originally intent.  Arbitrage rebate regulations force any bond issuer to pay 100% tax on investment earnings of gross proceeds in excess of the bond’s arbitrage yield.  Here are a few items to consider:BP3.jpg

  • In general, paying arbitrage rebate is a good thing because it means that you have earned the maximum interest income allowed during your project.
  • Using a reputable arbitrage rebate compliance firm will help you determine your potential liabilities.

Municipal Advisor Rule: The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act amended the Exchange Act of 1934 to add a new requirement that “Municipal Advisors” register with the SEC.  The rule places a fiduciary obligation on those providing certain financial and investment advice to municipal entities.  Please also condsider the following:

  • You should not take advice regarding the investment of your proceeds from someone who is not a municipal advisor registered with the SEC.
  • There are some exemptions in regards to registering as a municipal advisor.
  • Exemptions include regisBP3a.jpgtered investment advisors; they already have a fiduciary responsibility.
  • Additionally, your underwriter should not be giving you advice regarding the investment of proceeds as it is outside their scope of work.
  • Finally, if broker dealers are not registered as municipal advisors, they cannot present investment advice but may provide information on securities they have available for purchase or sale.

Remember, prudent investment of your bond proceeds will help you work towards maximizing interest income over the life of your project.  The more you earn, the lower the overall financing cost of your project.

If you would like to speak with a PUBLIC TRUST ADVISORS™ public funds investment professional regarding bond proceeds management, please email info@publictrustadvisors.com and a local representative will be in touch. 

*The information presented should not be used in making any investment decisions. The presentation is not a recommendation to buy, sell, implement, or change any securities or investment strategy, function, or process. Any financial and/or investment decision should be made only after considerable research, consideration and involvement with an experienced professional engaged for the specific purpose. All comments and discussion presented are purely based on opinion and assumptions, not fact, and these assumptions may or may not be correct based on foreseen and unforeseen events. All calculations and results presented are for discussion purposes only and should not be used for making calculations and/or decisions. Any financial and/or investment decision may incur losses.

Tags: yield, Local Government Investment Pools, investing bond proceeds, fixed income management services, local government investment pool administration, LGIP, LGIP Operational efficiency, Investing Public Funds

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