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 2017.

Total Investment Portfolio

The county’s total holdings at the end of October had a market value of $422.8-million. Excluding cash, the Treasurer’s Office has invested $327-million (77.3%) across a variety of fixed income security types. The total portfolio has a Yield-to-Maturity of 1.350% with an average maturity of 2.7 years.

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.

We have included the 1 Year Treasury Note in this benchmark as an experiment. Over the last six months, County Funds have held a 76 to 99 basis point spread over the 1 Year Jumbo CD. The composition of our portfolio has more in common with Treasury Notes than bank certificates, as you can see from the chart. We will change our benchmark to the 1 Year Note in December 2017.

In previous reports, we discussed how the county’s bond lowered overall yield when compared to our benchmark, the 3 Year Treasury Note. Since the trend line for County Funds mirrors the trend line of our benchmark, we see this as indication that our portfolio is in line with expectations.

As short-term municipal bonds mature, our portfolio continues to improve against the 3 Year Treasury. Overall performance was 30.3 basis points off our benchmark in October. We expect to close the gap in the next twelve months as the bulk of the investment of our bond proceeds convert to cash.

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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