PFM tells Albany committee portfolio posted gains in second quarter; city investment portfolio near $33 million

PFM Asset Management presented Albany City's quarterly investment performance for the period ending June 30, 2025, reporting that the city maintained a roughly $33 million market portfolio and generated significant interest income in the quarter.

The presentation, delivered to the Albany City Council Standing Committee on Audit and Fiscal Sustainability, covered macroeconomic drivers (inflation, yields, tariffs and the recent Moody's downgrade), portfolio composition, recent purchases and quarterly returns.

The PFM presenter told the committee that the portfolio's amortized cost was about $32,400,000 and the total market value was about $33,000,000. Yield at cost for the portfolio was reported at 4.58% and yield at market at 4.21%. Net new purchases for the quarter totaled roughly $8,500,000, and PFM said it had identified opportunities to add nearly $6,000,000 in new names to the portfolio during the quarter.

"This quarter, you can see 301,000 in interest earned during the 3 month period, positive change in market value of 188,000, and total dollars returned of 490,000 in the quarter alone," the PFM presenter said. PFM reported the portfolio returned about 1.5% for the quarter, outperforming its benchmark by about 22 basis points (benchmark 1.28%). Over the prior year the one-to-five strategy the city follows returned roughly 6%.

PFM framed performance against recent market themes: continuing—but cooling—economic activity, headline and core inflation measures (core PCE 2.7% in May 2025), an unemployment rate near 4.1% as of June 2025, tariff-related volatility and the market's evolving view on Fed rate cuts. The presenter also discussed Treasury yields and yield-curve dynamics, noting the city benefited from higher short-term yields and widened spread opportunities that allowed selective purchases.

Committee members asked for clarifications on macro impacts and on how the firm would react to further sovereign-rating or market moves; PFM reiterated it was not proposing a wholesale shift away from U.S. Treasuries but noted some higher-yielding opportunities in corporate and asset-backed products. City staff confirmed the city's effective portfolio duration was near 2.08 years (about 101% of the benchmark) and that 61% of holdings were rated AA or higher by S&P.

The committee received the presentation with no formal action taken on the portfolio itself. Staff said the committee will receive a preview of fiscal-year 2025 year-end audit results and continued quarterly investment reporting at a future meeting.