ATLANTA - Louisiana's first local government investment pool last week chose Reich & Tang as its investment manager.
State Treasurer Mary Landrieu, who serves on the executive committee of the Louisiana Asset Management Pool, said that the selection of Reich & Tang, a New York-based mutual fund manager, clears the way for the program to begin receiving deposits within 60 days.
A custodial bank for the pool will be chosen within the next week to 10 days, Landrieu said.
The Louisiana Asset Management Pool, a recently incorporated nonprofit entity, seeks to bring together the assets of many local governments in the state to help them achieve a higher rate of investment return than they could achieve on their own. The pool also seeks to save on funds' management costs through economies of scale. The Treasurer's office has estimated that more than $1 billion statewide is available for investment in the pool.
"I'm pleased we've come up with a safe and effective way for local governments, particularly smaller municipalities and political subdivisions, to generate general higher investment returns on their money," Landrieu said.
Landrieu said that the choice of Reich & Tang followed a two-month selection process in which 13 firms submitted proposals. Seven finalists were chosen for oral interviews.
Reich & Tang, a division of New England Investment Companies L.P., is a wholesaler of mutual fund products with more $60 billion in funds under management.
The Louisiana Asset Management Pool will invest in U.S. Government Treasury and Agency notes, repurchase agreements, and certificates of deposit in Louisiana-based banks. It is also allowed to invest in mutual and trust fund institutions registered with the Securities and Exchange Commission.
In its start-up phase, the pool's portfolio will be structured with a 90-day average maturity and will only invest in short-term U.S. Treasury and Agency securities.
According to a 1991 survey by the National Association of State Treasurers, 28 states maintain local government investment pools, which have drawn about $50 billion in assets and 16,000 participants. Investment pools for local government have existed since 1979.