Governor  Dannel P. Malloy
 

Cash Management

STIF - Frequently Asked Questions

  1. What is STIF?
    The Treasurer’s Short-Term Investment Fund (STIF) is an investment pool of high-quality, short-term money market instruments. Operated in a manner similar to money market mutual funds, STIF is rated AAAm by Standard & Poor’s, and has an average maturity of under 60 days. Created in 1972, STIF serves as an investment vehicle for the operating cash of the State Treasury, state agencies and authorities, municipalities, and other political subdivisions of the State..

  2. What is STIF’s Investment objective?
    STIF seeks as high a level of current income as is consistent with, first, the safety of principal invested by the State, municipalities and others, and, second, the provision of liquidity to meet investors’ daily cash flow requirements.

  3. How has STIF performed over the past several years?
    STIF has performed quite strongly. From July 2006 through June 2016, STIF has out-performed:
        * Similar funds by an average of 19 basis points
        * 90-day Treasury Bills by an average of 36 basis points
    From July 2006 through June 2016, STIF’s above-average performance has earned an additional $81 million in interest for Connecticut governments and their taxpayers.

  4. What is the advantage of investing in a pool such as STIF?
    STIF allows the complete, same-day liquidity of an overnight investment with the yield of longer-term securities. A pool such as STIF also provides diversification of securities and maturities, which reduces risk. STIF assets have ranged from $3.7 billion to $6.7 billion the last several years and provide individual investors with the benefits of its substantial purchasing power.

  5. What is STIF’s designated surplus reserve?
    When STIF was established in 1972, a reserve was created to enhance its primary objective of safety. The reserve presently contains in excess of $54.0 million, and is added to daily at the annualized rate of one-tenth of one percent of the Fund's value, until it reaches one percent of the value of all investments in the Fund. Should a significant loss from a security default or a decline in market value of a security occur, it would be charged against this account. This reserve provides a level of security which very few money funds or pools offer their investors.

  6. What are floating rate securities?
    Floating rate securities are securities in which the interest rate paid to investors fluctuates at specific times by a formula specified in the indenture based on standard short-term money market interest rate benchmarks such as the Fed Funds, Prime, LIBOR, and Treasury Bill rates. STIF purchases only those securities in which the interest rates move in the same direction and in the same amount as the benchmarks.

  7. Why does STIF purchase floating rate securities?
    Floating rate securities enable STIF to earn slightly higher yields with similar credit risks. The issuer is willing to pay a slightly higher yield on the floating rate security because it has access to the funds for a longer period of time.