CCLA announces the launch of The Public Sector Deposit Fund
New AAA rated fund for public sector cash
CCLA, the specialist fund manager for charities and local authorities, announcet that on Wednesday 25 May the Public Sector Deposit Fund (PSDF) opened to public sector investors, having successfully raised its seed funding investment. The PSDF is a UCITS qualifying money market fund (QMMF) developed by CCLA together with the public sector to meet their cash needs.
The UK FSA regulated, AAAmmf rated fund has received wide support from local authorities across the UK, and will open with seed funding of over £100 million. Designed with guidance from the Local Government Association (LGA), the key investment objectives of the fund are security, liquidity and yield. The fund will be fully transparent and CCLA’s management of the fund will be monitored by a public sector advisory board, which will ensure the fund remains aligned with the principles and values of the sector, and serves its needs.
CCLA’s CEO Michael Quicke said: “The PSDF allows public sector investors with a common interest to invest together. Local authorities and other public sector organisations collectively have large deposits, and share very similar interests and purposes. They also share the same investment challenges, with many having suffered from the fall-out of the global financial crisis.” “The PSDF will offer local authorities a AAA rated home for their cash, with the advantages of scale and diversification together with the cost-effective expert management required in a fast moving world. The fund has a fair management fee
structure, will accommodate both large and small investors, and all investors will share in the success of the fund through a reduction in fees as the fund grows.”
Stephen Jones, Group Finance Director for the Local Government Group said: “The Public Sector Deposit Fund is a ground-breaking initiative that will bring the substantial but often elusive benefits of cooperation between public sector organisations within reach at a very challenging time for local authorities.”
Councillor Ian Carr, Leader of Test Valley Borough Council, the first local authority to pledge money (£1m) to the fund, said: “We are always on the look out for opportunities to invest our money in a safe and prudent way for the residents of our Borough, and this new Public Sector Deposit Fund provides the perfect vehicle to do just that. We are delighted to be investing as a seed funder and look forward to a prosperous relationship with CCLA.”
Charles Hughes-Penny, Chairman of Investment Committee at City of London Corporation, one of the largest seed funders with £10 million pledged, said: “The City of London Corporation is delighted to support the fund which meets a current need and will help generate additional revenue for local authorities, which should be welcomed in this time of public spending restraint.”
Cllr Richard Kemp at Liverpool City Council, whose motion to support the launch with a pledge of £2m received unanimous support in a meeting of the full council, said: “After the problems caused by the Icelandic banking crisis, councils have sought absolute safety in investment which has meant miserable returns on their necessary cash holding. By forming what is, in effect, a mutual of councils they are getting good financial returns by using the muscle of the entire sector. I see no reason why all councils will not keep some of their money in this fund.”
Michael Quicke concluded: “We believe that there is no other money market fund that has been developed in such close conjunction with local authority organisations to meet the needs of local authorities and the broader public sector.”
“CCLA is owned by its charity and local authority clients and is attractively positioned to provide the management, administrative and regulatory structure required to launch and manage a public sector deposit fund without the inherent conflicts of external financial
CCLA has managed local authority funds for over 40 years and is part owned by the Local Authorities Mutual Investment Trust (LAMIT). LAMIT was established to provide investment services for local authorities in the UK, and is controlled by members and officers appointed by the associations of local authorities in England, Wales, Scotland and Northern Ireland and by the client representatives of our local authority investors. This unique structure ensures strong governance, transparency and alignment between our interests and those of our local authority clients. CCLA is authorised and regulated
by the Financial Services Authority (FSA).