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City Treasurer reports $681 million portfolio, $18 million in interest for year; emphasizes liquidity and policy limits
Summary
City Treasurer Ray McCrae told the Tracy Finance Committee that the city's pooled and non-pooled investments total $681 million, produced about $18 million in interest this fiscal year, and remain liquid while staying within policy limits such as a 30% cap on corporate bonds.
City Treasurer Ray McCrae told the Tracy Finance Committee on Oct. 13 that the city's investment portfolio totaled $681 million, with $606 million in the pooled portfolio and $75 million in non-pooled reserves. "The pooled investments are $606 million," McCrae said, and the combined total "brings us $681 million."
McCrae said the market value of the portfolio was roughly $2 million above book value and that the portfolio's blended yield was 4.341%, outperforming some short-term benchmarks. "We averaged, we totaled, for the year, $18 million," he said when summarizing annual interest income, adding that the city earned about $2 million in June alone.
The treasurer described deliberate shifts in duration: the portfolio's average maturity moved from about two years to roughly two-and-a-half to three years as managers extended maturities in expectation of falling rates; final maturities remain constrained by policy to five years. McCrae said about 26.3% of the portfolio is in corporate bonds, under the city's 30% corporate-bond limit. "We monitor the corporate bonds so that we don't have an overweight in any one particular place," he said, noting managers include Chandler Asset Management, J.P. Morgan and Invesco.
McCrae emphasized liquidity protections: roughly 30% of the portfolio matures in under a year and the Local Agency Investment Fund (LAIF) provides immediate-day liquidity up to the $75 million limit. He also reiterated restrictions in policy such as a prohibition on investments with final maturities beyond five years.
Committee members had no substantive questions on the report and the committee formally received the treasurer's report.
The treasurer's comments provided detailed breakdowns of manager allocations, issuer concentration and fee ranges; he also noted the city avoids municipal bond exposure as an issuer and rarely uses commercial paper or CDs. The report will be on record for council review.
