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 November 2016.

Total Investment Portfolio

The county’s total holdings at the end of November had a market value of $436.4-million. Excluding cash, the Treasurer’s Office has invested $379.5-million (87.2%) across a variety of fixed income security types. The total portfolio has a Yield-to-Maturity of 1.05% with an average maturity of 3.1 years.

Weakness in Cash Reserves

Market Value of Assets Under Management (AUM) increased 92.8% in FY2016 as a result of the county issuing bonds for capital projects in the next several years. The sudden spike in AUM means that the portfolio is more heavily invested than historical averages.

With 87.2% of the fund invested, the portfolio does not have as much Money Market cash in reserve. The Treasurer’s Office prefers an asset allocation of about 20% to 25% in cash reserves to cover unexpected expenditures that arise throughout the year.

Our objective in FY2017 will be to increase cash reserves to customary levels. We expect to allocate $25-million to Money Market accounts in the first half of the fiscal year. This money will come through a combination of cash flow control and levy distributions to the county as a taxing body.

Accrued Interest Up 10.9% in FY2016

The preliminary estimate on the amount of accrued interest earned in the portfolio is $2.6-million for Fiscal Year 2016. When adjusted for holding additional bond proceeds, accrued interest increased 10.9% over last year’s earnings. We do not include simple interest earned in operating bank accounts.

The portfolio ended the year with a 59.7 basis point yield, compared to 53.8 basis points in FY2015. The change denotes a 10.9% yield improvement year-over-year, which allows us to compare portfolio earnings in an adjusted manner.

Average yield on the 1 year U.S. Treasury in FY2016 was 57.7 basis points. This means county investments outperformed its benchmark by 3.5% for the year.

Custodian

Cost + Accrued

Market Value

Accrued Interest

% Portfolio

Investment Manager
UBS

$ 26,092,326.33

$ 25,623,912.71

$ 138,786.02

6.05 %

William Blair

$ 88,236,069.79

$ 87,660,514.35

$ 272,409.30

19.55 %

New York Mellon

$ 1,933.97

$ 1,993.97

0.00 %

2016 Bond Proceeds
Fifth Third Securities

$ 32,750,935.22

$ 32,239,099.55

$ 247,406.77

7.43 %

First Empire

$ 24,952,020.11

$ 24,712,231.56

$ 187,921.19

5.78 %

JP Morgan

$ 53,696,310.38

$ 52,755,366.00

$ 297,812.55

12.49 %

MB Financial

$ 32,797,137.08

$ 32,123,557.09

$ 412,916.08

7.28 %

Wells Fargo

$ 50,425,153.79

$ 49,475,694.40

$ 388,602.36

11.17 %

Broker Dealers
Fifth Third Securities

$ 18,392,774.17

$ 18,045,730.15

$ 139,570.31

4.20 %

First Empire

$ 2,386,875.30

$ 2,461,551.80

$ 17,200.83

0.55 %

JP Morgan

$ 26,660,528.80

$ 26,282,191.00

$ 211,132.97

6.15 %

Private Bank

$ 1,000,005.00

$ 1,000,000.00

$ 301.03

0.24 %

MB Financial

$ 5,032,688.23

$ 5,016,300.45

$ 22,840.49

1.18 %

Money Market (C)

$ 18,930,642.62

$ 18,930,642.62

$ 2,350.68

4.45 %

Money Market (T)

$ 26,007,882.41

$ 26,007,882.41

6.12 %

Multi-Bank Securities

$ 1,596,394.28

$ 1,573,718.15

$ 17,618.38

0.36 %

UBS

$ 21,555,452.57

$ 21,102,010.55

$ 191,228.54

4.88 %

Wells Fargo

$ 5,977,384.17

$ 5,888,748.79

$ 48,931.01

1.37 %

Providence Bank

$ 3,000,000.00

$ 3,000,000.00

$ 6,070.41

0.71 %

WinTrust Financial

$ 1,556,911.65

$ 1,530,402.51

$ 5,198.61

0.35 %

Total

$ 441,049,425.87

$ 435,431,488.06

$ 2,602,377.53

100 %

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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