This report examines the performance of the public funds currently invested by the Will County Treasurer’s Office. This narrative covers investment activity and performance in May, 2011.

Corporate Class C Fund

The Corporate Class C Fund is the principal operating account for the county. The Treasurer’s Office uses this fund to pay employees, vendors, and other operating liabilities.

As of May 31, 2011, Corporate Class C Fund had a total balance of $82,425,671. Of this total, we have invested 57.6% in certificates, CDARs, and commercial paper ($47.5-million).

The Corporate Class C Fund reached its lowest balance in May just prior to the first tax levy distribution on May 19, 2011. Over the next six months, the county will receive approximately $111-million in property tax revenue of which our office will invest $75-million.

Our strategy for the Corporate Class C Fund focuses on building an investment ladder that will mature every two weeks and fund the county’s payroll requirement. We will rely heavily on certificates (51%), commercial paper (12.5%), and bonds (8%) to earn competitive yields on this ultra-short duration portfolio.

After our first round of investing on May 19, the weighted maturity of the fund decreased to 118 days from 139 days, while yield barely fell. This means that our portfolio is becoming more efficient, earning higher yields despite shorter durations.

Treasurer’s Class C Fund

The Treasurer’s Class C Fund is the county’s capital improvements fund. The Treasurer’s Office holds proceeds from the county and township motor fuel tax, statutory proceeds, automation funds, and other department revenue.

As of June 1, 2011, Treasurer’s Class C had a total balance of $159,234,796. Of this total, we invested 44.7% in certificates, CDARs and commercial paper ($71.2-million).

In May, the Treasurer’s Office increased its cash position as investments matured as part of a rebalancing strategy. Over the next quarter, we will increase investment holdings in this account to a point where we hold only 15% cash. The reason for this rebalancing is because the county historically draws less than $4-million a year from this fund.

Our goal is to keep 85% of this fund invested with a portfolio of treasury and agency bonds, certificates, and commercial paper that has a weighted average maturity of 2.5 years. This strategy will allow us to capture higher yield and improve overall portfolio performance.

Benchmark Tests

The Will County Treasurer’s Investment Policy sets two benchmarks to which we will compare investment performance:

  1. The 3-month average of the 90-day Treasury Bill as quoted by Bloomberg LP
  2. The Money Funds Report of all taxable 7-day simple yield as reported on www.IMoneyNet.com

As of June 1, 2011, both the Corporate Class C Fund and Treasurer’s Class C Fund exceed our policy benchmarks. The average maturity of our funds was 114 days (Corporate Class C) and 144 days (Treasurer’s Class C). Despite the short duration, both funds exceeded our informal benchmark against the 12-Month Treasury. Neither fund exceeded our informal benchmark against the 52-Week CDAR.

As of June 1, 2011 Corporate Class C Treasurer’s Class C
7-Day Net Simple 0.0200 % 0.1779 % (Exceed) 0.2382 % (Exceed)
90-Day Treasury Bill 0.0400 % 0.1779 % (Exceed) 0.2382 % (Exceed)
12-Month Treasury 0.1700 % 0.1779 % (Exceed) 0.2382 % (Exceed)
52-Week CDAR 0.2700 % 0.1779 % (Below) 0.2382 % (Below)

Summary

 

Over the next quarter, the Treasurer’s Office will rebalance our two main public fund pools to capture higher yield while keeping the money safe and liquid. Our investment strategy takes into account the role each pool has in servicing the financial needs of the county.

For the Corporate Class C Fund, we will focus on short-term cash flow. The Treasurer’s Class C Fund, on the other hand, will seek stronger performance in the longer-end of the yield curve because of its role as a reserve fund.

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