Milford’s Finance & Audit Committee on Aug. 11 received a second-quarter investment report from PFM Asset Management and discussed proposed revisions to the city’s investment policy that would raise the allowable allocation to asset-backed securities from 10% to 20% and extend ABS maximum maturities from two to three years.

The report, presented by PFM advisor Jeffrey Fasino, described a high-quality, liquid portfolio and cited strong fixed-income returns year-to-date. Fasino said the committee’s benchmark — the U.S. Treasury 1–5 year index — produced unusually strong 12‑month returns and that the committee’s portfolio has delivered returns “really good, year to date and during the quarter.”

Why it matters: the committee supervises a public portfolio that staff and the advisor manage on residents’ behalf. Committee discussion focused on safety, liquidity and yield — the priorities named in the city’s investment policy — and on giving PFM AM authority to act quickly in markets to seek incremental yield without compromising credit quality.

PFM provided a snapshot showing a portfolio concentrated in treasuries, agencies and investment-grade corporates, with overall duration “just under 2 years.” Lou Vitola, senior accountant in the finance department, said the portfolio was “in excess of $40,000,000” when describing fund totals, while a PFM market-value snapshot cited by Fasino showed about $37,000,000. Vitola and Fasino both emphasized the portfolio’s liquidity and high credit quality.

On returns and fees, committee members asked whether reported performance was gross or net of fees. Fasino said the returns shown were gross; Lou Vitola clarified that the manager’s fee is 15 basis points and provided an example converting the gross-to-net differences: "the 0.38% performance over the benchmark gross of fees would equate to 23 basis points net of fees," Vitola said.

Committee members asked about how quickly the advisor can change allocations. Fasino said the portfolio is “very liquid” and that PFM actively manages sector exposure; Vitola said staff and PFM typically coordinate cash‑flow buckets two to three times a year (budget timing, tax receipt timing and later in the year when reserves are drawn) and that PFM handles day‑to‑day trading within the investment policy’s guardrails.

On policy revisions, Vitola summarized the two principal recommended changes from PFM AM: increasing the ABS sector cap to 20% and extending ABS maximum maturity to three years. He said PFMAM’s rationale is that short‑duration, high‑quality ABS (for example, instruments backed by equipment leases or auto loans) can offer incremental yield while keeping portfolio risk low if held within the proposed duration and credit limits.

Council members and staff agreed the change would be implemented gradually if approved: Fasino noted the portfolio is currently around 7% ABS and that PFM would not “flip the switch” to 20% immediately. Vitola described additional protections in the policy, including credit-quality minimums, issuer concentration limits and a continued duration cap for ABS.

What happens next: the committee discussed two procedural routes — make a recommendation to council that the city adopt Resolution 2025‑10 to update the investment policy statement, or have staff present the same material to council and let council decide. No formal committee vote on the policy change was recorded at the meeting.

Quotes in context (selected):
"These are funds that are owned by the citizens of Milford and therefore they have to be invested with the most prudent investment standards in mind," said Lou Vitola, senior accountant, describing policy priorities of safety, liquidity and yield.
"We are very rigid and very specific with our investment policy statement," Vitola said, adding the city prioritizes principal safety first.
"A diversified portfolio is a good portfolio," Jeffrey Fasino, PFM AM, said of sector rotation and active management.

Ending: Committee members signaled willingness to send the policy changes to council for formal action or to have staff present the changes at council. Staff will include the proposed redline policy and the clean copy with council materials; the committee will receive ongoing quarterly reports from PFM AM if the current arrangement continues.