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 September 2016.

Total Investment Portfolio

The county’s total holdings at the end of September had a market value of $393.9-million. The Treasurer’s Office has invested $334.6-million (84.9%) across a variety of fixed income security types (excluding cash). The total portfolio (excluding cash) has a Yield-to-Maturity of 1.02% with an average maturity of 1,177 days (3.2 years).

Investing County Bond Proceeds

The Will County Board issued $175-million in 30 Year Bonds on August 9th. The proceeds will fund construction of a new courthouse, sheriff’s facility, and replace the century-old health department building. As custodian of the bond’s proceeds, the Will County Treasurer invests this money until we pay architects, contractors, and suppliers.

Ahead of issuing the bond, we asked our investment partners how we could work with them to invest these proceeds. The bond doubled our assets under management, so diversification, among other things, is a very important consideration.

After conversations with the County Finance Department, we will structure the investment over a three year period. The bulk of the money will mature in the third year, as the Finance Department anticipates using other revenue streams in the first 18 months. We will invest the money with five firms.

  1. The first year is an investment of $35.8-million, invested by First Empire Securities.
  2. The second year is an investment of $72.2-million. Fifth Third Securities and MB Financial each will invest $36.1-million.
  3. The third year is an investment $114.2-million. JP Morgan and Wells Fargo each will invest $57.1-million.

Our office received $205.5-million in bond proceeds in late August. We held this money as cash until we begin investing in September. We expect next month’s report to reflect the additional assets.

County’s Levy Distribution

The Treasurer’s Office will collect and distribute approximately $1.77-billion in real estate property taxes this calendar year. As a taxing body itself, Will County receives a portion of the levy distribution.

Our office has invested $70-million of the county’s levy in order to have reserve cash during non-levy collection months between December and next May. We also have invested an additional $15-million in order to pay bond debt service for Fiscal Year 2017.

At the end of September, our office built a $55-million structured “ladder” of investments where funds mature every two weeks to coincide with payroll and accounts payable operations. We invest in high-quality commercial bonds, municipal bonds, US Treasuries, and negotiable certificates of deposit. We expect to complete the ladder for the total $85-million by the end of the fiscal year.

Benchmark Performance

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.

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