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Albany committee hears quarterly investment report showing 4.65% annual return; no action taken
Summary
PFM Asset Management presented the city's quarterly investment review for the period ending Dec. 31, 2024, reporting a roughly $29.3 million portfolio, a 4.65% one-year return that outperformed the benchmark by 83 basis points, and recommended a bias toward Treasuries; the committee took no formal action.
Justin Nocello of PFM Asset Management presented Albany City's quarterly investment performance review for the period ending Dec. 31, 2024, reporting a managed portfolio balance of about $29.3 million and a one-year portfolio return of 4.65%, which Nocello said outperformed the benchmark by 83 basis points.
The presentation, delivered to the Audit and Fiscal Sustainability standing committee, summarized market themes, noted continuing inflation uncertainty and Fed policy considerations, and described portfolio composition and recent trades. Nocello said the city's strategy had favored shorter-duration, liquid instruments and that, "we have a strong preference for treasuries at this point." He also clarified a correction in the deck: the benchmark's effective duration should read 2.04, and the portfolio was positioned at roughly 102% of that benchmark.
Why it matters: the portfolio holds operating and reserve funds for Albany City and performance and risk positioning affect municipal cash management, revenue available for city operations, and comparisons to short-term alternatives such as LAIF (Local Agency Investment Fund).
Key figures and portfolio activity from the presentation:
- Managed account / investment portfolio balance: about $29,300,000 (down roughly $40,000 from the prior quarter). - Liquidity: about $7.5 million held in an established liquidity account as of February (about $6 million moved during the prior third quarter). - Purchases during the 12-month period: approximately $5,370,000 (including corporate notes from Accenture, Toyota Credit, State Street; Bank of America commercial paper; treasuries; and a Freddie Mac security). - Sales and maturities: roughly $3,300,000 in aggregate. - Interest and returns: $268,000 in interest earned during the past quarter; roughly $1.2 million in interest earned over the past year; total one-year portfolio return 4.65%. - Yield measures: yield at cost 4.79%; yield at market 4.55%. - Sector allocations called out in the deck: Treasuries ~26.5%; agency/commercial mortgage-backed securities ~23.6%; asset-backed securities nearly 17%; corporates ~22.5%; negotiable CDs ~4.6%. - Short-term liquidity benchmark: the CAMP Pool 7-day yield was 4.65% (down from 5.08% the prior quarter).
Nocello explained that spreads on many fixed-income sectors had tightened over the year and that the firm had been opportunistically purchasing corporate notes and other securities where it found value. He also said PFM had shifted the city's benchmark from LAIF to the ICE BofA 0-5 Year U.S. Treasury Index and described differences in duration and asset eligibility between the two.
Committee discussion was limited. Council Member Jordan and Member Mickey did not press additional questions after the presentation, and the chair closed item 4-1 with no committee action required.
No votes or policy changes were adopted; the committee moved on to the next agenda item.
