Billion pound council fund floated
Author: Local Government Chronicle |
Council chiefs are working up plans for a bespoke multi-billion-pound fund for councils to pool their cash and get better returns on investments.
The Local Government Association is in talks with city fund managers to set a council specific money market fund in which councils could invest some of their estimated £30bn worth of short term cash.
A survey carried out in March suggested £600m of local government cash (about 2%) is invested in money market funds but officials hope a bespoke fund, run by fund managers not councils, could attract significantly more council cash.
Existing money market funds vary in size from anywhere between £1bn and £20bn.
The size of a fund designed specifically for local authorities would be dependent on demand but it is hoped it would be worth over £1bn, the LGA said.
The move comes just weeks before the first year anniversary of when councils discovered they had close to £1bn worth of investments frozen in stricken Icelandic banks. The episode led to councils evaluating their investment strategies.