Pooled Investments Program
Investing in Interesting Times
Recently there’s been a lot of focus on the impact that increasing interest rates will have on short term investments. Investing is complicated at the best of times, so what should one consider when deciding between investing in a term deposit as opposed to MFA’s Money Market Fund (MMF), particularly when rates are rising?
MFA’s MMF rates reflect the Bank of Canada’s Overnight Rate, which is the rate at which banks lend or borrow amongst each other. For 2010, the Overnight Rate has been in the range of 0.25% to 1.00%, in effect anchoring yields of money market instruments at near zero rates. Term deposits, on the other hand, have set interest rates over a specific term. These investments are generally not liquid and do not trade in the market. At first glance, term deposits can appear to be a more attractive investment, but consider the following factors:
1. Flexibility
If the investor’s circumstances change, the MMF is readily saleable and fully liquid. In a rising interest rate environment, this offers the investor the flexibility to monitor the markets and take advantage of investment opportunities rather than being locked into a fixed rate term deposit.
2. Diversification
Rather than being an investment in a single organization such as with term deposits, MFA’s MMF holds a portfolio of securities issued by federal and provincial governments, Canadian banks and highly rated quality corporations. This diversification reduces the issuer-specific risk that exists in a deposit with a single organization. For local governments, this also provides access to corporate investments not allowed outside of the MMF, further enhancing diversification.
3. Active Management
The MMF is actively managed by Phillips Hager North. The Fund Investment Managers continuously monitor the markets and adjusts the holdings of the Funds to take advantage of opportunities that may arise.
4. Compounded Earnings
MFA’s MMF is valued every day, with earnings credited to unitholders on a daily basis. This allows the investor to take advantage of compounding, which may result in higher overall earnings than a term deposit.
The key message for investors is to match your investments to your cash flow needs and related time horizons.
From materials provided by Phillips, Hager & North
 Invest surplus cash at competitive rates with great liquidity
and limited risk
Are you looking for better ways to manage surplus funds? The MFA
offers three investment options to help you make the most of your
investments:
1. MONEY MARKET FUND
for investments of less than one year,
2. INTERMEDIATE FUND
for investments from one to three years,
3. BOND FUND
for investments of more than three years.
MFA Pooled Investment Funds 2009 Report (pdf)
MFA Pooled Investment Funds 2010 Report (pdf)
Take advantage of the benefits
Your funds are pooled with other communities in high quality investments
and managed independently by Phillips, Hager & North Investment
Management. By using our program and pooling your investments you
realize numerous benefits:
- maintain easy access to your money - within 24 hours for money
market, three to four days for longer term funds, deposit or
redeem amounts as low as $1,000
- earn competitive net returns that have consistently beaten
investment benchmarks
- receive investment dividends in addition to interest income
- simple, quick and easy transactions by fax and phone
- money market fund can be used like a bank account
- set-up multiple accounts for reserves or project funds
- receive weekly or monthly reporting
- free redemptions, subscriptions and transfers
- allows you to outsource short-term investment
Who can access the program?
The Pooled Investment Program is available to:
- Municipalities
- Regional Districts
- Regional Hospital Districts
- E-Comm, CREST
- Greater Vancouver Sewerage and Drainage District
- Greater Vancouver Water District
- South Coast BC Transportation Authority (TransLink)
- Universities, Colleges and School Districts
- First Nations
- Improvement Districts and municipal organizations
Forms
Contact
For additional information on the Pooled Investment Program, please contact Meagan James or Graham Egan |
