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Treasury manager: Boca Raton portfolio returned 4.28% in FY2024; council asks about custodial and international exposure
Summary
The city's treasury manager reported a 4.28% amortized return for fiscal year 2024 and described a shift to longer-duration, fixed-income "bullet" investments; council members asked for more detail about custodial arrangements for cash and whether the reported portfolio includes international holdings or pension assets.
The Boca Raton Financial Services Department presented its annual investment report for the fiscal year that ended September 30, 2024, reporting a 4.28% amortized return and describing portfolio decisions made in response to recent Federal Reserve rate movements.
Conahan, the city's treasury manager, told council members the investment policy prioritizes safety, liquidity and yield and that staff has shifted a portion of the portfolio into longer-duration, self-amortizing "bullet" investments in the three- to five-year range to lock in favorable rates. "The priority, as always, is in order, safety, liquidity, and yield," he said, and noted that the portfolio's allocations and durations were adjusted during the fiscal year to manage exposure as market conditions changed.
Why it matters: The report showed stronger amortized returns in FY2024 (4.28%) compared with the prior year (3.09%). Council members used the presentation to probe operational details, including where cash and money-market holdings are held and whether the report includes pension funds or other international holdings.
In response to Deputy Mayor Drucker's question about time deposits and money market accounts, Conahan said the city holds investments with a third-party custodian and that short-term cash generated from coupon payments or receipts is temporarily held in a money-market fund managed by the custodian. "It is an FGFOA best practice to hold all investments with a third party custodian," he said.
Council members also asked whether international exposure common in some pension holdings appeared in the city's report. Staff clarified the presented portfolio excludes pension assets (those are governed by separate pension boards) and contains no equity positions; the portfolio does include some corporate bonds issued by U.S.-based financing arms of foreign companies (for example, Toyota Motor Credit Corporation). Conahan and another finance official also noted the city's investment policy currently allows Israel bonds as the only foreign-issued debt under the policy.
What happens next: Staff said the Financial Advisory Board has already received the detailed holdings and can provide further line-item detail to council members on request; the council did not take formal action during the meeting.
