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Ada County treasurer reports roughly 4.0% portfolio yield, cites market volatility and recent Ginnie Mae purchase
Summary
Treasurer Beth Mahn told the board the county portfolio is diversified, yields about 4.019% to maturity and the county recently purchased a Ginnie Mae mortgage-backed security; staff emphasized safety, liquidity and yield amid volatile Treasury movements.
Ada County Treasurer Beth Mahn briefed the Board of Commissioners on April 8 about the county’s investment portfolio, saying the overall portfolio yield to maturity is about 4.019 percent and that the county is maintaining a diversified position to preserve safety and liquidity during recent market volatility.
Mahn told commissioners the county’s portfolio holds roughly half of its assets in highly liquid instruments (the Local Government Investment Pool and money markets), allowing the county flexibility to meet obligations and to take advantage of market movement if needed. She said the county recorded approximately $6,089,000 in interest income over the current fiscal period.
A county investment staff member reported one purchase for the month: a Ginnie Mae mortgage-backed security (MBS) with a yield to maturity of 4.543 percent. The staff member described the purchase as part of a strategy to take advantage of movements in fixed-income markets.
Treasury staff discussed recent short-term volatility in benchmark yields. They said the 10-year Treasury note yield was around 4.2 percent on April 2, dipped to about 3.87 percent after certain announcements, and later rose to approximately 4.25 percent; staff noted that such moves can be large in a short period and compared the recent movement to disruptions in March 2020.
Mahn emphasized that the county follows its written investment policy, which prioritizes safety, liquidity and yield across economic cycles. “Following those principles are especially important during times like now,” Mahn said in the meeting.
Commissioners asked clarifying questions about mortgage and mortgage-backed security rates and the county’s approach to liquidity; staff said the county’s position is intended to ensure it can meet obligations and take advantage of opportunities in the bond market. No formal action was required for the report.
The report noted that fixed-income coupon receipts and tax-collection cycles cause month-to-month fluctuations in interest income; staff said they are working with the county’s investment advisors, including Clearwater Advisors and others, to monitor conditions and provide guidance.
