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Investment adviser pitches moving city funds from PTIF to diversified multi-year portfolio
Summary
An investment advisory firm presented options for Beaver City to move a portion of its deposits out of the state Local Government Investment Pool (PTIF) into a laddered portfolio of treasuries, agencies, corporate bonds and CDs, citing potential yield gains, liquidity planning and a proposed fee structure.
An investment advisory firm gave Beaver City Council a detailed presentation on a proposal to invest some city funds outside the Utah Public Treasurers' Investment Fund (PTIF) in a laddered portfolio of U.S. Treasuries, government agencies, high-quality corporate bonds, commercial paper and certificates of deposit.
The presenter said the city's investment balances (presented as a multi‑million dollar portfolio) include a sizable overnight liquidity position and that a multi‑year ladder could lock in higher yields and provide greater budget stability than keeping all funds in PTIF. The presenter said the firm would work with city staff on a cash‑flow analysis to match maturities to the city's liabilities and to ensure liquidity needs were met.
Why it matters: PTIF yields move with Federal Reserve policy, the presenter said, and if the Fed cuts rates the pool's yield can fall. A longer, laddered portfolio can provide predictable income over the term of the securities and reduce revenue volatility, according to the firm.
Details presented to the council included: - Suggested portfolio maturity limits consistent with the Utah Money Management Act (the presenter noted a practical maximum of about five years). - A sample allocation with securities maturing across 2–5 years to "walk in" yield and lock rates for those periods. - The need for a formal investment policy, custody arrangements (securities held in the city's name), monthly reporting and daily reconciliation. - Fee structure: the firm described a minimum advisory fee (presented as $15,000 per year for a city the size discussed) and said custody costs could be credited against the advisory fee if the city used certain custodians.
Council members asked about cash‑flow assumptions, the city's current overnight liquidity and procurement steps needed to engage an adviser. The presenter said custody account setup is typically the longest step (five to seven business days) and that the firm would assist with policy drafting and public‑meeting disclosures as required under Utah law.
No decision was made. Council members asked staff to continue reviewing the proposal, clarify numbers, and return with additional information and procurement options.
Quotation: The presenter summarized the pitch this way: "Our goal is to prudently invest income according to cash flow needs to help enhance that income and produce that income for our clients." The assertion and other presentation details were delivered during the firm's formal presentation to the council.
Next steps noted in the meeting: staff follow‑up on cash‑balance figures, procurement options, and sample contract terms; potential further discussion at a future council meeting.
