At Michigan CLASS, we are committed to providing services that fit the varying needs of Michigan public agencies through many different market conditions and investment cycles. As a result of the economic downturn in response to the COVID-19 pandemic, the Michigan CLASS Board of Trustees recognized the need for a longer-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 EDGE product designed to complement our existing liquidity programs.
What is Michigan CLASS EDGE?
Michigan CLASS EDGE is an enhanced cash portfolio with a weekly redemption structure and a variable NAV of approximately $10.00 per share. Below are a few key features about the EDGE portfolio:
EDGE 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 EDGE incorporates longer-dated securities in order to generate a higher rate of return, it is recognized as a variable NAV portfolio. With EDGE, the Michigan CLASS investment team adheres to the same top-tier credit metrics utilized in Michigan CLASS yet does not claim to be a stable or constant NAV portfolio; Michigan CLASS has always provided Michigan public agencies a transparent view into the inner workings of their portfolios. In short, EDGE is a variable NAV portfolio that seeks to generate a higher yield by investing farther out the yield curve.
EDGE transactions settle one business day after the transaction date is selected in the Michigan CLASS online portal
If you enter an EDGE 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 EDGE are the same as Michigan CLASS but maturities differ
While both Michigan CLASS portfolios only invest in securities that are permissible under applicable Michigan state laws governing investment options for local agencies, the extended maturity range of EDGE securities distinguishes it from Michigan CLASS. Both Investment Policies utilize the same asset classes while EDGE permits longer-dated securities.
How Can I Use EDGE?
EDGE is best suited for your public agency’s non-operating reserve funds. It might be helpful to review past years’ investment balances to better evaluate which funds may be considered for longer-term investing; whatever represents the “low watermark,” or the funds that have never been withdrawn or redeemed, is what could be invested in EDGE. While your Michigan CLASS general account likely forms the foundation for your immediate liquidity needs, EDGE can optimize funds that do not need to currently be withdrawn or redeemed.
Should you be interested in learning more about Michigan CLASS EDGE, please contact the Michigan CLASS Relationship Team. If you’re ready to get started with EDGE today, please fill out the form below!