Government Liquidity Fund

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We have launched an innovative strategy for institutional investors looking to diversify their cash holdings beyond the banking sector. Our Government Liquidity Fund is a money market fund that incorporates security for investors in the form of UK government securities, offers liquidity and aims to provide a yield equivalent to prime money market funds.

The Government Liquidity Fund is unique. It conducts the majority of its reverse repo transactions with UK defined benefit pension funds, taking UK government debt as security against all cash investments. This means that the Fund is able to bypass the majority of dealing costs that are prevalent in the repo market. This structure aims to offer security to cash investors, without compromising on liquidity or yield relative to prime money market funds.

Security: all trades secured against UK government securities. Approximately 70% of exposure to UK pension funds and 30% to traditional banks.  All pension fund counterparties must be eligible to enter a PPF assessment period in the event their corporate sponsor experiences financial difficulty

Liquidity: daily liquidity with overnight access (i.e. one day's notice required with 4pm cut off UK time)

Yield: in line with prime money market funds and with the objective of offering yields higher than those provided by government liquidity funds dealing exclusively with banks

Constant-NAV structure:  under the new EU money market regulations, we expect that the Fund will retain a constant NAV whereas prime money market funds will likely convert to a variable NAV

SNAPSHOT

PERFORMANCE

GLF Fund table

Insight's money market team

Our team comprises five dedicated money market and liquidity fund managers who invest £32.6bn on behalf of our clients. They have an average of 22 years' industry experience.

Our team also draws on our wider Fixed Income Group which employs 106 investment professionals managing £121.1bn of fixed income assets. The team is supported by 43 credit analysts and eight dedicated investment dealers.

Government Liquidity Fund

  • £2.1bn Fund size
  • 35days Weighted average maturity
  • 35days Weighted average life
  • 0.39% Performance 1 month
  • 0.31% Performance 3 month

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Portfolio data shown correct as of 30 November 2017. Team statistics and assets under management (AUM) data shown as at 30 September 2017 and represented by the value of cash securities and other economic exposure managed for clients.

Please note past performance is not a guide to future performance. The value of investments and any income from them will fluctuate and is not guaranteed (this may be partly due to exchange rate fluctuations). Investors may not get back the full amount invested.

Important information

Derivatives may be used to generate returns as well as to reduce costs and/or the overall risk of the portfolio. Using derivatives can involve a higher level of risk. A small movement in the price of an underlying investment may result in a disproportionately large movement in the price of the derivative investment.

Shareholders of the Fund and clients of the Investment Manager and Sub-Investment Manager may act directly as repo and reverse repo counterparties to the Fund. This may give rise to potential conflicts of interest.

A credit default swap (CDS) provides a measure of protection against defaults of debt issuers but there is no assurance their use will be effective or will have the desired result.

Investments in bonds are affected by interest rates and inflation trends which may affect the value of the portfolio.

The investment manager may invest in instruments which can be difficult to sell when markets are stressed.

Where leverage is used through the use of swaps and other derivative instruments, this can increase the overall volatility. Any event that adversely affects the value of an investment would be magnified if leverage is employed by the portfolio and losses would be greater than if leverage were not employed.

The CNAV Insight Liquidity Funds are investment funds and not banking products and whilst preservation of capital is a major component of the objective of the funds it is not guaranteed. Neither Insight nor any other BNYM group company will provide capital support for the CNAV Insight Liquidity Funds in the event of any capital loss arising within the funds.

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