Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Public Finance topic
No spam. Unsubscribe anytime.
PFM Asset Management outlines strategy to increase yield while prioritizing safety for Renton funds
Summary
PFM Asset Management introduced itself to Renton council as the city’s new non‑discretionary investment adviser, reported no major policy red flags, and recommended gradually lengthening portfolio maturities and adding limited sectors (commercial paper, corporates, supranationals) to modestly raise yields while preserving safety and liquidity.
Kristen Travellis, the city’s finance director, introduced PFM Asset Management as Renton’s new non‑discretionary investment adviser and invited the firm’s Luke Schneider and Ryan Casher to present their team, approach and the recently updated investment policy statement.
“We are a fiduciary to you,” Ryan Casher said, emphasizing that PFM’s legal and ethical obligation is to act in the city’s best interest. The presenters described firm resources — portfolio managers, a 10‑person credit research team and centralized trading and compliance — and said the firm supports public‑sector clients with a safety‑first approach: “safety, liquidity and then return in that order,” Schneider said.
PFM said its review of Renton’s investment policy revealed no glaring red flags but that some policy language appeared dated. The firm summarized three near‑term opportunities to add yield without compromising safety: (1) increase the portfolio’s weighted average maturity where cash flows permit, (2) add limited sectors beyond treasuries and agencies — such as short‑term commercial paper, high‑quality corporate notes, agency mortgage‑backed securities and supranationals — and (3) use active daily portfolio management to capture incremental basis points over time.
When asked for specifics, Schneider said adding allowable sectors could deliver “maybe a half a percent over the long term” compared with a pure‑treasury allocation, while active management could add another 10–20 basis points. He cautioned complexity and liquidity tradeoffs: supranationals offer incremental yield but are less liquid and might suit portions of the portfolio not expected to be sold frequently; repurchase agreements offer small gains but can be administratively burdensome.
Why it matters: Renton’s investment policy guides how city cash and bond proceeds are managed; changes in duration, sector exposure and active management affect earnings that support municipal services. PFM also explained operational controls tied to the updated policy, including coding the policy into trading systems and quarterly reporting to council and staff.
What’s next: PFM and staff will continue to implement the updated investment policy, perform cash‑flow analyses to identify funds appropriate for longer maturities, and report quarterly on performance and compliance. Councilors asked PFM to return with more detail on proposed sector allocations and implementation timing.
