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Virginia Investment Pool Webinar:
Introducing the VIP Stable Value Liquidity Pool &
MYACCESS
December 9, 2016
Public Trust Advisors 2016 ©
VIP Liquidity Pool Objectives and Benefits
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VIP liquidity pool provides a liquid investment pool alternative for Virginia localities whose prime fund options are disappearing due to money market reform
VIP liquidity pool serves as a “sweep fund” for the VIP 1-3 Year portfolio facilitating a more efficient transaction experience
VIP liquidity pool is designed to operate efficiently and at a low cost structure
VIP liquidity pool offers participants diversification for their short term cash
Professional, active management
Rating Agency and Program Administrator oversight
Governed by a Board of Trustees, which is comprised of local government Treasurers and Chief Investment Officers
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Money Market Reform and Bank Regulation Impact on Local Governments
Money Market reform is forcing many funds to convert from “Prime” to Government resulting in lower yields
In response many funds have closed or consolidated
Many local governments are looking to LGIPs to replace their existing Prime funds
Bank regulation and Basel 3 are impacting the bank deposit industry
Money Market Funds and Bank Deposits have been popular investments for Virginia localities
VIP liquidity pool could replace the demand for Money Market Funds/Bank Deposits and give Virginia localities an additional diversification tool for their cash and bond proceeds
Public Trust Advisors 2016 ©
Money Market Reform Impact on LGIPs
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Local government investment pools (LGIP’s) get accounting and reporting guidance from GASB not the SEC
Historically LGIP’s were managed as “2a-7 like”
In response to MMF reform, GASB published new guidelines for LGIPs. Statement 79 was issued to provide clarification to external investment pools
Statement 79 replaces the reference in existing GASB literature to Rule 2a-7 with criteria that are similar in many respects to those in Rule 2a-7.
Maturity
Credit quality
Diversification
Liquidity
Shadow Pricing
LGIPs will still be able to maintain a stable $1.00 NAV without becoming a government securities-only fund
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Investment Management, Transfer Agent, Fund Accountant: Public Trust Advisors
Public Trust team is a leader in all aspects of managing local government investment pools.
Public Trust has demonstrated its abilities to improve investment performance, build client relations and introduce new LGIP participant services.
The Public Trust team completed successful 60-day transitions of COLOTRUST, NYCLASS, Texas CLASS, Michigan CLASS, TrustINdiana and LAMP onto its LGIP Administration System.
Public Trust maintains a dedicated fund-accounting and client service team whose primary objectives and responsibilities focus on the satisfaction of our LGIP participants.
Public Trust Advisors 2016 ©
Public Trust Advisors – Liquidity Pool Experience
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Public Trust Advisors LLC (Public Trust) is a SEC registered independent investment advisor headquartered in Denver, Colorado with offices in New York, Florida, Texas, California, Ohio, New Mexico, and Michigan.
Public Trust is a national leader in providing customized investment advisory solutions based on each clients’ own unique cash flows, risk tolerances and investment guidelines.
Public Trust services 8 LGIP’s nationwide with more than 3,600 LGIP participant accounts. Combined assets under management including administration/advisement total over $14.7 billion*
Public Trust also manages an additional $5+ billion* in customized separately managed portfolios
*As of November 30, 2016
LGIP Services Assets Rating Investment Style
Administration & Investment Advisor
$4.7 billion S&P AAAm Prime and Government
Administration & Investment Advisor
$1.3 billion S&P AAAm Prime
Administration Only $1.2 billion S&P AAAm Prime
Administration & Investment Advisor
$813 million S&P AAAm Prime
Administration & Investment Advisor
$560 million S&P AAAm Government
Administration & Investment Advisor
$4.9 billion S&P AAAm Prime and
Government
Administration & Investment Advisor
$685 million NR Prime
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Public Trust: LGIPs That We Serve
As of November 30, 2016. Standard & Poor’s Ratings in no way guarantee favorable performance results and should not be construed as safety in an investment.
Public Trust Advisors 2016 ©
VIP Stable NAV Liquidity Pool Term Sheet
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Governance: VML/VACo VIP Board of Trustees
Organizing Document: VIP Trust Agreement, as amended 9/23/16
Program Participants: Political Subdivisions of the Commonwealth of Virginia
Administrator: Virginia Local Government Finance Corporation (d.b.a VML/VACo Finance)
Investment Manager: Public Trust Advisors
Transfer Agent & Fund Acctg: Public Trust Advisors
Custodian: Wells Fargo
Portfolio Objectives: 1) Safety – Preservation of principal
2) Offer daily liquidity
3) Offer a competitive yield for overnight liquidity investment option
Public Trust Advisors 2016 ©
VIP Stable NAV Liquidity Pool Term Sheet
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Benchmark: 3-Month U.S. Treasury / S&P AAA LGIP Index
Investment Style: Prime
Permitted Investments: Investments allowable under the Code of Virginia (2.2-4500 et. seq.)
S&P Rating: AAAm
Valuation: Daily; Stable $1.00 NAV
Liquidity: Daily
Public Trust Advisors 2016 ©
VIP Portfolio*
Government 6%
Repurchase Agreement 18%
Negotiable CD’s/ Bank 48%
Commercial Paper 25%
Municipal 0%
Corporate 3%
AUM $159,680,285
WAM (R) 46 Days
Ratings A-1+ =56% / A-1 = 35% / AAA = 9%
Net Yield (12/8/16) 0.62%
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VIP Stable NAV Liquidity Pool Composition
• High quality diversified portfolio offering daily liquidity • Scale and technology provide cost advantages over other funds • The fund’s objective is to offer the highest yielding AAAm rated liquidity vehicle for
Virginia investors
Source Public Trust Advisors, LLC *as of 12/8/16
Public Trust Advisors 2016 ©
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S&P PSFR Rating Matrix Guides Investing
*As of December 8, 2016
Non-Rated (2a7-Like)
AAAm Rated VIP Stable Value
Required VIP Stable Value
Actual*
Maturity
Max Fund WAM (R) 60 days 60 days 60 days 46 days
Max Fund WAM (F) 120 days 90* days 90* days 65 days
Max maturity per security (Floating – Government)
None 2 years 2 years 2 years
Max maturity per security (Fixed & Floating – Corp)
397 days 397 days 397 days 397 days
Credit Quality
Minimum A-1+ allocation N/A 50% 50% 56%
Maximum A-1 allocation N/A 50% 50% 35%
Minimum A-2 allocation 3% 0% 0% 0%
Pricing
Frequency Discretionary Weekly Weekly Daily
Diversification
Max per Security 5% 5% 5% 3.13%
Max per Repo Counterparty Unrestricted 50% - A1+/25% - A1 50% - A1+/25% - A1 20% - A1+
Minimum Liquidity
Overnight / 7 days 10% / 30% N/A N/A N/A
Public Trust Advisors 2016 © 12
Security Selection
A rigorous relative value assessment and a disciplined research process drive security selection.
We focus on the factors unique to each sector when evaluating securities for investment.
Security Analysis Quantitative Analysis Fundamental Credit Research Qualitative Analysis
• Maturity Characteristics • Security Structure • Scenario Analysis
Produce Buy List
Purchase Security
Relative Value Assessment
Security Selection
• Identify securities with attractive risk/reward characteristics • Security and market inefficiencies can be identified and captured
• Historical Spread Analysis • Volatility • Yield Curve Considerations
• Internal proprietary score • Proactive Approach • Industry Outlook
• Liquidity • Supply Outlook • Investor Demand
The Public Trust LGIP Administration System is a hosted, scalable, customizable, highly automated back-office administration system that enables our team to focus on what is truly important; the needs of our LGIP participants.
Public Trust has partnered with an industry leading technology provider to build a customized LGIP platform for transfer agency, shareholder accounting, fund accounting and online transactions.
The administration system processed 4.6M transactions in 2015.
To better serve our LGIP participants, the system is regularly upgraded:
Recently completed user acceptance testing on a fund accounting release;
Completed two upgrades to shareholder accounting module in Q4 2015;
Additional shareholder accounting enhancement release scheduled for Q4 2016;
Continued enhancements to LGIP participant reporting and the secure Web-based transaction solution for LGIP clients (MYACCESS).
The Public Trust LGIP Administration System has been awarded a SSAE 16 SOC 1, Type II designation.
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VIP Liquidity Pool Administration
Single platform, evolving toward end-to-end processing.
Services multiple funds with different cut-off times and investment mandates.
Has the ability to provide customized shareholder accounting and reporting solutions.
Its robust and highly-integrated nature improves processing times and helps control operating costs.
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VIP Liquidity Pool Administration System
Transfer Agency System Reporting System Fund Accounting System
Tailorable to constant
dollar or floating NAV
funds
Multi-fund schematics
Integration with the trade-
order management
system
Daily marked-to-market
Automated reconciliation
Web-based participant
access to order entry,
account records, fund
information, etc.
Live data from T/A
Back-end admin reporting
Statement and confirm
generation
Participant record-keeping
Customizable to fund
characteristics
Bank interface, automated
wire & ACH upload
Dividend feed from fund
accounting system
Feeds live data to Reporting
MYACCESS is Public Trust’s online transaction system and reporting portal, created specifically for local government investment pool participants.
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VIP Reporting System: MYACCESS Overview
High availability and increased levels of security.
Live data from transfer agency system.
A variety of cash management tools including participant-to-participant transfers and one-to-one bank relationships at sub-account level.
Tablet-ready.
MYACCESS runs on a Web server that queries a database, which is not on an internet facing server, but is instead in a safe-zone, which keeps the data storage secure.
Uses a shell security system to protect the entire environment from unauthorized access and gives LGIP participants secure access to their information.
Leans on Entrust Identity Guard for user authentication. Identity Guard has won industry awards for Best Multifactor Security Solution.
Security expands to multiple levels (more than username and password), including but not limited to multifactor authentication as well as device and geographic location identification.
The environment is monitored 24/7 by a live person to identify any attempted unauthorized access.
Servers and data can be restored offline if a server requires patching, before being restored to online status.
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Public Trust LGIP Transaction System: MYACCESS Security
VML/VACo Finance: (804) 648 - 0635
Robert Lauterberg: [email protected]
Steve Mulroy: [email protected]
James West: [email protected]
VIP Client Services: (855) 249 - 8588
Client Service Team: [email protected]
Public Trust Advisors: (407) 588 - 9391
Tom Tight: [email protected]
John Grady: [email protected]
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VIP Key Contact Information – www.virginiainvestmentpool.org
Public Trust Advisors 2016 ©
The investment advisor providing these services is Public Trust Advisors, LLC , an investment adviser registered with the SEC under the Investment Advisers Act of 1940, as amended. Registration with the SEC does not imply a certain level of skill or training. Additionally, this registration provides no guarantee of return or protection against loss.
The data in this presentation is unaudited.
Performance comparisons will be affected by changes in interest rates. Investment returns fluctuate due to changes in market conditions. Investment involves risk, including the possible loss of principal. No assurance can be given that the performance objectives of a given strategy will be achieved. Past Performance is no guarantee of future results. Any financial and/or investment decision may incur losses.
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Additional Disclosure
