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 August 2014.

Total Investment Portfolio

The county’s total holdings at the end of August had a market value of $240.5-million. The Treasurer’s Office has invested $187.5-million (77.9%) across a variety of fixed income security types (excluding cash). The total portfolio (including cash) has a Yield-to-Maturity of 97.4 basis points with an average maturity of 1,653 days (4.5 years).

The Treasurer’s Office sold $5-million worth of long-term investments during August. The sale was necessary in order to accommodate unusually payables that will take place at the beginning of September. These payables included bond service, real estate acquisitions, and expenditures of RTA tax revenue by the Highway department.

As a result of this sale, overall performance in our portfolio weakened considerably in August. The Treasurer’s Office holds more short-term investments that we have during the past 12 months. This means that our total performance is close to our benchmark against the 3-year U.S. Treasury Note.

It is our understanding that high capital needs will continue during the next quarter. If this is the case, the Treasurer’s Office will continue to sell long-term assets to increase cash-on-hand. The result of another asset sale will mean total return in our portfolio will fall below a key benchmark for the first time in four years. We have moved Benchmark Performance up in this report to highlight how the sale of long-term assets for cash have negatively affected total performance.

Benchmark Performance

For the past 18 months, the Will County Treasurer’s Investment Policy sets two benchmarks against which we compare the performance of our investments.

  1. The 90-Day Average of the 1-Year Jumbo Deposit National Rate as quoted by the FDIC
  2. The 90-Day Average of the 3-Year Treasury Note as quoted by the U.S. Treasury Department

We use these two benchmarks because they closely relate to the length of time we hold an investment.

The table indicates two things. First, monetary policy of the Federal Reserve has led to an improvement in the 3-year U.S. Treasury bond yield. In the last six months, the 3-year UST has strengthened by an average of 20 basis points. Second, yield in County Funds over the same six month period are flat, having only improved 2 basis points. The spike in June, as we have previously explained, is the result of a rally in the corporate bond market at the beginning of the summer.

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 August 30, 2014, the market value of the Corporate Class C Fund was $116.5-million. Yield in the Corporate Class C Fund, was 71.3 basis points. Our cash position remains high as we continue to place real estate tax revenue into fixed income securities.

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 August 30, 2014, the market value of the Treasurer’s Class C Fund was $105.9-million. Yield in the Treasurer’s Class C Fund, including cash and money markets, was 1.368%. Performance was stable during the period as the Treasurer’s office took no distribution or made no investment in the fund.

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