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 June 2012.

Total Investment Portfolio

The county’s total holdings at the end of June had a market value of $324.8-million, an increase of $16.3-million from May. The office invested $24.5-million of property tax levy distributions and allowed $8-million of investments to mature.

The Treasurer’s Office has invested $172.9-million (53.3%) across a variety of fixed income security types. The total portfolio has a Yield-to-Maturity of 1.22% with an average maturity of 1,214 days (3.0 years). The projected cash flow in May was $380,854.

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 June 31, 2012, the market value of the Corporate Class C Fund was $129.9-million, an increase of $7.6-million from May. Excluding cash, yield in the Corporate Class C Fund was 77.2 basis points.

As we discussed in last month’s report, our office expects to invest $70-million of the county’s total property tax levy in the next six months. By the end of June, we had invested $36.4-million, returning 83.2 basis points (0.832%) yield. Compared to our Benchmark Goal, we are 18.2 basis points ahead of the Six Month T-Bill and 50 Basis Points.

The success of our investment program is the result of a focus on high-quality commercial and municipal bonds. As we discussed on our website on July 2, 2012, we believe this sector of the fixed income market is a safe place to earn a respectable interest rate compared to Money Market Accounts that return between 0.1% and 0.3% APY.

High-quality commercial and municipal bonds, on the other hand, earn between 0.65% and 2% APY.  Although a low interest rate, it is two to six times more return than a money market account…Given our short-term investment strategy, it is worth the effort involved.

Based upon this way of thinking, our office plans to invest an additional $20-million in July. This money currently earns 25 basis points (0.25%) in collateralized Money Market Accounts. Our banking partners take our money and invest it in the fixed income market, and then pay us a fixed interest rate while keeping the spread as profit. We believe the county should earn the spread the banks currently take, and we will draw down our Money Market Accounts by about half their present value.

The following is a list of our investment purchases since May 1, 2012.

Instrument Institution Amount Yield
Goldman 11/1/12 JPM $ 2,000,000 0.7000 %
Union Bank 12/3/12 BAML $ 2,500,000 0.4700 %
IBM Corp 11/29/12 UBS $ 500,000 0.3700 %
GE Cap Corp 12/17/12 US Bank $ 2,000,000 0.3000 %
Blackrock 12/10/12 UBS $ 3,000,000 0.4000 %
JPM 1/2/13 JPM $ 2,500,000 1.0700 %
UBS 1/8/13 UBS $ 2,500,000 1.0300 %
GE Cap Corp 1/8/13 UBS $ 1,000,000 0.4730 %
Union Bank 1/14/13 BAML $ 1,500,000 0.5300 %
Prudential 1/15/13 JPM $ 2,000,000 0.7000 %
Union Bank 1/28/13 BAML $ 1,000,000 0.8000 %
Bank One 1/30/13 JPM $ 750,000 0.5300 %
Air Products 2/1/13 UBS $ 250,000 0.3350 %
Merrill Lynch 2/5/13 JPM $ 3,000,000 1.8000 %
Toyota Motor 2/11/13 BAML $ 3,000,000 0.5100 %
GE Cap Corp 2/11/13 US Bank $ 1,150,000 0.3400 %
Sysco Corp 2/12/13 UBS $ 850,000 0.3750 %
Union Bank 2/25/13 BAML $ 850,000 0.5800 %
Toyota Motor 2/25/13 BAML $ 1,000,000 0.5100 %
Honeywell 3/1/13 UBS $ 400,000 0.3360 %
Morgan Stanley 3/1/13 JPM $ 3,000,000 2.0700 %
Verizon 3/15/13 JPM $ 1,000,000 0.7500 %
Joliet Park B 2/1/14 FITB $ 100,000 1.1500 %
RTA 4/1/14 JPM $ 250,000 1.0440 %
RTA 6/1/14 JPM $ 250,000 1.0640 %
Joliet Park C 3/1/15 FITB $ 100,000 2.0000 %
Total $ 36,450,000 0.8323 %

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, automation funds, and other revenue.

As of April 30, 2012, the market value of the Treasurer’s Class C Fund was $186.2-million, an increase of $8.6-million. Excluding cash, yield in the Treasurer’s Class C Fund was 3.26%.

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, 2012, both the Corporate Class C Fund and Treasurer’s Class C Fund exceed our policy benchmarks. The funds also exceed informal benchmarks against the 12-Month Treasury and 52-Week CDAR. The yields reported for Benchmark Tests include cash holdings.

July 2, 2012 Corporate Class C Treasurer’s Class C
7-Day Net Simple 0.0300 % 0.4572 % (Exceed) 1.7841 % (Exceed)
90-Day Treasury Bill 0.0900 % 0.4572 % (Exceed) 1.7841 % (Exceed)
12-Month Treasury 0.2000 % 0.4572 % (Exceed) 1.7841 % (Exceed)
52-Week CDAR 0.2200 % 0.4572 % (Exceed) 1.7841 % (Exceed)
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