Investment adviser urges Fairfield Township to lock rates with short-term bonds, use Huntington for custody

At a recent Fairfield Township meeting, an investment adviser reviewed the township’s cash and investment holdings and recommended buying bonds with maturities up to five years to lock current yields and reduce volatility.

The adviser said the township holds about $15,000,000 in investments in an insured cash sweep (ICS) account as of March 31 and described that product as a spread of bank CDs across institutions to remain within FDIC coverage. The adviser warned that short-term rates on ICS-type products can fall quickly if the Federal Reserve cuts rates again and said the Ohio Revised Code allows the township to buy bonds with maturities up to five years.

The adviser recommended moving a substantial portion of operating reserves into a long-term managed portfolio to create “long-term certainty,” saying the typical approach is to place about 80% of the amount corresponding to the low point in the township’s annual cash cycle into the managed portfolio and leave roughly 20% liquid. The presenter said this would build stability “against what might potentially happen in the markets if rates continue to move lower.”

On custody, the adviser said the firm would not hold township funds directly. “We don’t touch or hold any of your funds or investments at all,” the investment adviser said, adding that brokers would deliver securities into a custody account held in the township’s name and that only designated township staff could move money in or out. The adviser said the firm prefers either U.S. Bank or Huntington Bank as custodian and that Huntington is the township staff preference; the plan would use a third-party custodian as the safekeeping agent.

The presentation included a discussion of indexing and short-term alternatives, referencing local government investment pools (LGIP) such as Star Ohio and noting market volatility in recent days, including a sell-off in equities and changes in bond yields. The adviser said the Federal Reserve had cut rates by a full percentage point since September of the prior year and that speculation about additional cuts could push short-term yields lower, which informed the recommendation to extend maturities and lock rates for stability.

The adviser drew on publicly available audits and first-quarter 2025 statements from township staff to analyze cashflow cyclicality and balances. The presenter noted that Kim and Shelly, township staff members, had supplied recent statements to update the review. No formal motion or vote on investment strategy, custodian selection, or portfolio changes was recorded in the provided excerpt.