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City retains investment policy; portfolio yields improve after rate increases
Summary
City staff and outside adviser reviewed Aurora’s investment policy and portfolio performance through March 31, 2025, reporting a larger cash balance earlier in the year, a term‑securities portfolio near $789 million, and improved yields.
City finance staff presented the annual review of Aurora’s investment policy and portfolio and recommended no changes to the policy, which was last modified in June 2021. Teresa Sedmack (Treasury/Finance) told the committee the policy “generally outlines the goals, objectives, allowable investments, concentration limits and performance benchmarking” that govern the city’s portfolio.
Mary Donovan of investment adviser Insight Investments reviewed holdings and performance as of March 31, 2025. Donovan said the portfolio’s cash component was high in the first quarter—about $65 million—because of seasonal cash-flow needs and that the term‑securities portion stood at about $789 million. Donovan reported the full portfolio totaled about $860 million with an average yield a little over 4% and an average duration of roughly 2.04 years.
Donovan described the portfolio’s allocation as high‑quality and diversified: treasuries roughly 35%, government agencies 27%, corporate bonds about 25% (with a three‑year maximum maturity policy for corporates), and municipal bonds about 5%. She said the city has been extending duration to lock in higher yields after the Federal Reserve’s rate increases, and noted that securities maturing and reinvested had moved from yields near 2% to new investments averaging over 4%.
Council members asked how allowable investments are set; Sedmack said the policy “generally follows state statute.” A councilor asked about possible federal changes to agency ownership structures (Fannie Mae and Freddie Mac); Donovan said current market pricing still reflects an implied government association and that removing any implied guarantee would be “a big, big change” and is not her base case.
Staff and Donovan described the advisory relationship as nondiscretionary—Insight seeks approval from city staff before trades—and said recent coupon income and liquidity decisions were coordinated with the city to invest accumulated cash when appropriate.
The council did not adopt changes to the policy; staff recommended no policy edits at this time and will continue monitoring market developments and federal regulatory proposals relevant to agency securities.
