Rio Rancho advisory board votes to reinvest 2024 permanent fund earnings; recommends investment-policy changes

The City of Rio Rancho Investment Advisory Board voted Feb. 26 to recommend that the governing body reinvest the city's 2024 permanent fund earnings rather than distribute them, and approved staff's recommendation to present edits to the permanent fund investment policy statement to the city council.

The recommendation follows presentations from the city's external investment advisors and portfolio managers, who reviewed quarterly performance and proposed two principal changes to the investment policy: clarify the policy's target return language and add a dedicated 6% policy target to "real assets and infrastructure" within the growth sleeve. Advisors also recommended moving the plan's current U.S. small-/mid-cap holding to an active small-/mid-cap pool to better match a broad-market benchmark exposure (the Russell 3000). Mallory Sampson, an advisor participating in the meeting, recommended the policy language: "the annual rate of return on the assets are commensurate with the then-prevailing investment environment." Sampson said that change avoids inappropriate references to a "discount rate" in the existing policy.

Why it matters: The board's recommendation preserves the corpus of the permanent fund and seeks to strengthen the policy framework that governs how the city invests that money. The permanent fund's market value at the end of 2024 was reported as $13,983,900; net earnings after fees were $1,253,509.89, of which the charter allows 50% to be available for distribution (about $626,007.54). Staff and advisors said reinvesting the earnings would grow the fund's corpus and better position it as a potential multi-year revenue source for the city.

Advisors' presentation and analysis Mallory Sampson and Chad Stapleton reviewed the recommended policy edits and the firm's suggested portfolio adjustments.…