At FLCLASS, we are committed to providing services that fit the varying needs of Florida governmental entities through many different market conditions and investment cycles. As a result of the economic downturn in response to the COVID-19 pandemic in 2020, the FLCLASS Board of Trustees recognized the need for a medium-duration portfolio designed to generate a higher yield by investing further out the yield curve. With the assistance of investment advisor and administrator Public Trust Advisors, we are pleased to introduce the FLCLASS Enhanced Cash product designed to complement our existing liquidity portfolio.
What is FLCLASS Enhanced Cash?
FLCLASS Enhanced Cash has a weekly redemption structure and a variable NAV of approximately $10.00 per share. Below are a few key features about the Enhanced Cash portfolio:
Enhanced Cash is a variable NAV fund
A stable NAV portfolio generally requires a weighted average maturity (WAM) of 60 days or less and a weighted average life (WAL) of 120 days or less. Because Enhanced Cash incorporates medium-duration securities in order to generate a higher rate of return, it is recognized as a variable NAV portfolio. With Enhanced Cash, the FLCLASS investment team adheres to the same top-tier credit metrics utilized in the FLCLASS liquid portfolio yet does not claim to be a stable or constant NAV portfolio; FLCLASS has always provided Florida governmental entities a transparent view into the inner workings of their portfolios. In short, Enhanced Cash is a variable NAV portfolio that seeks to generate a higher yield by investing farther out the yield curve.
Enhanced Cash transactions settle one business day after the transaction date selected in the FLCLASS online portal
If you enter an Enhanced Cash redemption request on a Tuesday before 3:00 p.m. ET cut-off time, the funds will be available the following business day.
Eligible investments for Enhanced Cash are the same as the FLCLASS liquid fund but maturities differ
While both FLCLASS portfolios only invest in securities that are permissible under the Florida State Statutes for local governments, the extended maturity range of Enhanced Cash securities distinguishes it from the FLCLASS liquid fund. Both Investment Policies utilize the same asset classes while Enhanced Cash permits medium-duration securities.
How Can I Use Enhanced Cash?
Enhanced Cash is best suited for your local government’s non-operating reserve funds. It might be helpful to review past years’ investment balances to better evaluate which funds may be considered for medium-duration investing; whatever represents the “low watermark,” or the funds that have never been withdrawn or redeemed, is what could be invested in Enhanced Cash. While the FLCLASS liquid fund likely forms the foundation for your immediate liquidity needs, Enhanced Cash can optimize funds that do not need to currently be withdrawn or redeemed.
Should you be interested in learning more about FLCLASS Enhanced Cash, please contact the FLCLASS Relationship Team. If you’re ready to get started with Enhanced Cash today, please fill out the form below!