LGIP Operations and Fees
Whatever the investment strategy, LGIPs typically maintain a minimum level of liquidity to accommodate the redemption of shares and withdrawals. Participants may redeem their shares at any time, although there may be short waiting periods. Many municipalities and state agencies expect money to be available for withdrawals for payrolls or other operating expenses.
LGIPs often allow participants to invest and withdraw funds by writing a check or through a wire transfer. This allows funds to be invested and withdrawn on a daily basis, adding to an LGIP’s value as a cash management tool. Interest is earned daily.
LGIPs may invest only in securities allowed under state law, and these are often low-risk securities. Still, LGIPs are subject to investment risk because their value can decline over time. Moreover, despite being offered by the state, they are not usually insured or guaranteed by a government.
When LGIPs are administered by a management firm, the firm may ass