CapTrust tells Sun City West committee markets were broadly positive; members press on allocation, yields and past liquidation losses

CapTrust presented its market outlook and portfolio performance to the Sun City West Budget & Finance Committee on Dec. 18, saying broad asset classes produced positive returns through Sept. 30, 2025, and noting foreign equities and AI‑related investment were major drivers of 2025 gains.

"It's been a great year to be an investor in the market," Ryan Rafidi of CapTrust said in his market commentary, pointing to strong returns across U.S. large‑cap, small‑cap and international stocks and explaining that a weaker U.S. dollar had helped international performance. He also described the two components of fixed‑income return — yield and price — and noted that recent drops in Treasury yields contributed to price gains for bond holdings.

A CapTrust portfolio presenter reviewed the association's statement of activity and liquidity. The presentation showed net investment income of about $2.5 million that brought the portfolio to roughly $33–34 million as of Sept. 30, 2025, and reported a current cash reserve balance of about $4.8 million earning roughly 4% annually. The adviser said roughly $2.2 million left the portfolio in October to meet withdrawals and that about $1.7 million is expected to come in next year to cover short‑term needs.

Committee members and audience speakers asked questions about the 25% equity/75% fixed‑income allocation adopted earlier in the year, the effect of tariffs and whether the association's international exposure is hedged. CapTrust said the portfolio follows a global allocation and is not currency‑hedged; staff explained allocation decisions should reflect the association’s goals and stated preferences can be written into the investment policy statement (IPS) if the board desired a home‑bias.

Audience member Dennis Hansel pressed the presenters on yield methodology and past realized losses from forced liquidations. "So if the market value went down precipitously, our yield would be extraordinary," Hansel said; the adviser confirmed that SEC‑stated/current yield is calculated using market value and explained that stated yield on a new issue differs from current yield as market prices move. Hansel also cited past liquidation losses he recalled as about $800,000 and urged the committee to weigh that risk when setting capital and reserve budgets.

CapTrust and staff responded that the committee’s current policy requires short‑term needs (the next five years) to be held in treasury‑linked, principal‑protected instruments to avoid principal risk when those dollars are likely to be spent. The adviser emphasized that asset allocation should be driven by the organization’s objectives rather than short‑term market moves.

What’s next: CapTrust remains the committee's adviser; staff and the committee said they will continue to monitor liquidity, timing of capital needs and updates to the IPS. The committee accepted CapTrust’s presentation and moved on to the financial and capital budget items on the agenda.