S&P: Minnesota School District Liquid Asset Fund Plus - MSDLAF+ Term Series June 18 Assigned 'AAAf' Rating
The Minnesota School District Liquid Asset Fund Plus (MSDLAF+) is a joint powers entity in the form of a common law trust organized and existing under the laws of the state of Minnesota in accordance with the provisions of the Minnesota Joint Powers Act. The fund permits Minnesota school districts to pool their investment funds to seek the highest possible investment yield while maintaining liquidity and preserving capital. The fund was established on Nov. 29, 1984.
MSDLAF+ Term offers a fixed-rate, fixed-term investment with a minimum maturity of 60 days and a maximum maturity of one year. MSDLAF+ Term seeks to return all invested principal at a planned early redemption or upon a planned maturity date of a MSDLAF+ Term series. The investment strategy of MSDLAF+ Term is to match the cash flows required to meet participants' planned redemptions, including the projected dividend, with the cash flows from the portfolio.
The fund's investment objective is to provide an investment that can accommodate preset redemptions occurring anywhere from 60 days to one year from the time of investment, and that will produce the highest earnings consistent with preserving principal and meeting the redemption schedule. The portfolio seeks to assure the return of principal on the planned maturity date, although principal value may fluctuate prior to that date, and therefore may be greater or less than $1.00 a share. The fund seeks to achieve its investment objective through professionally managed investment programs in accordance with Minnesota laws and governed by the investment policies and restrictions.
The portfolio will generally consist of obligations of the U. S. government or its agencies and instrumentalities, commercial paper, certificate of deposits, time deposits, and repurchase agreements. The weighted average maturity for the fund is restricted to one year, and the credit quality of the issuer's or guarantor's short - and long-term unsecured debt must be rated in one of the two highest categories by a nationally recognized rating agency.
PFM Asset Management LLC is the administrator and investment adviser for the fund. As of June 2016, PFM had approximately $65 billion in assets under management with more than 200 employees. U. S. Bank N. A. serves as the custodian bank for the fund.
The 'AAAf' rating signifies the fund's portfolio holdings should provide extremely strong protection against losses from credit defaults. Our credit quality and volatility ratings are based on our analysis of a fund's eligible portfolio investments and strategy, historical return volatility, and management. The seven-category credit quality rating scale ranges from 'AAAf' (highest level of protection) to 'CCCf' (least protection). The ratings from 'AAAf' to 'CCCf' may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.
Our analysis seeks to identify risk sources in a managed fund's portfolio and investment strategies and to assess the likelihood of losses from credit defaults in the portfolio. We monitor fixed-income funds monthly to ensure the consistency of the funds' credit quality and volatility profiles with the assigned ratings.
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