CCLA INVESTMENT MANAGEMENT LIMITED PSDF(21)P20
Public Sector Deposit Fund Advisory Committee
Local Government Investments
On 22 June 2021, the Office for National Statistics published the Department for Communities and Local Government investment data for Q1 2021, and revisions to previous quarter data.
In the period 2008 to 2020 the investments held by Councils in calendar Quarter 1 has fallen when compared to the previous quarter, by an average of about 10%. In Q1 2021, the amount held fell by just 4.93%, or by £1.108 billion to £46.860 billion. The amount held is £3.24 billion and £8.69 billion higher when compared to Q1 2020 and Q1 2019, respectively. A breakdown of the figures shows in percentage terms the largest reductions occurred in Money Market Fund holdings, which reduced by 11.52%. Deposits at banks and Building Societies declined by £1.248 billion, or by 5.46%.
Proceeds held in Money Market Funds fell by £1.454 billion, -11.52%, to £11.172 billion, this is still over £3.4 billion higher than a year ago; the PSDF is up £0.580 billion over the one year period. MMF holdings still represents nearly a quarter of all Local Government investments. Over the quarter, PSDF client net holdings were down 22.6%.
Deposits at the risk-free Debt Management Office (DMO) deposit facility were also down over the quarter, falling by £0395 billion to £3.298 billion.
Slightly more risk appetite was taken, as investments designated “Longer Term” were up to £1.555 billion, the total holding represents 3.3% of Local Government investments.
The amount held in Certificates of Deposit remained close to the eight year low at £0.266 billion, not surprising given the depressed term deposit rates. This represents just 0.6% of Local Government investments.
Deposits with Financial Institutions were down £1.248 billion to £21.593 billion, representing nearly half the of local government investments.
Q1 2021 Q4 2020 (r) net flow as % of investments
LG Investments : £46,860b £49.290b -£2.430b -4.93%
LG funds in MMFs : £11.172b £12.626b -£1.454b -11.52% 23.8%
LG funds @ DMO : £3.298b £3.693b -£0.395b -10.70% 7.0%
“Longer term” : £1.555b £1.151b +£0.404b +35.10% 3.3%
LG funds in CDs : £0.266b £0.220b +£0.046b +20.91% 0.6%
LG funds @ FI’s : £21.593b £22.841b -£1.248b -5.46% 46.1%
C hart 1
In the period 2008 to 2020 the investments held by Councils in calendar Quarter 1 has fallen when compared to the previous quarter, by an average of about 10%. In Q1 2021, the amount held fell by just 4.93%, or by £1.108 billion to £46.860 billion. The amount held is £3.24 billion and £8.69 billion higher when compared to Q1 2020 and Q1 2019, respectively.
C hart 2
Proceeds held in Money Market Funds fell by £1.454 billion, -11.52%, to £11.172 billion, this is still over £3.4 billion higher than a year ago; the PSDF is up £0.580 billion over the one year period. MMF holdings still represents nearly a quarter of all Local Government investments. Over the quarter, PSDF client net holdings were down 22.6%.
C hart 3
Deposits at the risk-free Debt Management Office (DMO) deposit facility were also down over the quarter, falling by £0395 billion to £3.298 billion.
C hart 4
Slightly more risk appetite was taken, as investments designated “Longer Term” were up to £1.555 billion, the total holding represents 3.3% of Local Government investments.
C hart 5
The amount held in Certificates of Deposit remained close to the eight year low at £0.266 billion, not surprising given the depressed term deposit rates. This represents just 0.6% of Local Government investments.
Source: CCLA, ONS and DCLG (22 June 2021)
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Tags: deposit fund, term deposit, limited, management, deposit, investment, sector, psdf(21)p20, public