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 October 2015.

Total Investment Portfolio

The county’s total holdings at the end of October had a market value of $262.7-million. The Treasurer’s Office has invested $191.1-million (75.8%) across a variety of fixed income security types (excluding cash). The total portfolio (excluding cash) has a Yield-to-Maturity of 104.9 basis points (1.05%) with an average maturity of 1,474 days (4.1 years).

Restructuring Cash for Higher Yield

As we discussed in last month’s report, the Treasurer’s Office holds approximately$62-million in money market accounts at local community banks. We believe this amount of cash is more than is necessary to keep a well-funded reserve balance. As a result, we began reallocating $20-million in October in order to put this money to better use in our investment strategy.

We will restructure the portfolio using $20-million as part of two investments.

  1. We will increase the amount of money managed by William Blair & Company by $10-million in the Treasurer’s Class C Fund account. William Blair has managed this long-term investment for our office since 2012. The core amount under management after increasing our investment will be $85-million plus all unrealized gains in the portfolio, which is approximately $6-million.
  2. We will add $5-million to a $20-million portfolio currently managed by ClearArc Capital Investments. This assignment is under review already, so we will not add to the investment until this review is complete and the management responsibility awarded in December.

Benchmark Performance

For the past 24 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.

Maturity Structure

Maturity is the period of time for which an investment remains outstanding. Upon maturity, the bond issuer will pay back the full amount, plus any applicable interest to the county. This is how our office makes money for the county through our investment activities (excluding cash and cash reserves).

The Treasurer’s Office looks at the maturity of an investment with great interest because it must match our cash flow needs in order to pay outstanding bills and obligations. We invest operating cash into instruments with maturities of less than one year. Any money not needed to pay obligations within 12 months will be invested in longer term investments up to 10 years. We hold investments with maturities greater than 10 years. However, we actively trade those positions to capture investment gains from the overall bond market.

The average maturity of our portfolio is 1,474 days (4.1 years) as of this report.

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