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Hoxton Group tells Charles Town finance committee markets look "optimistic but cautious"; recommends modest rebalancing
Summary
Hoxton Group representatives briefed the Charles Town Finance Committee on the economy, saying Fed cuts could support both stocks and bonds but urging rebalancing. Presenters reported a 9.16% year-to-date return for the residual fund and recommended trimming equity exposure where allocations exceed policy.
Rob Relder, a representative of the Hoxton Group, told the Charles Town Finance Committee on Jan. 8 that recent market gains since 2023 have left bonds with a bumpy recovery and equities concentrated in a handful of large technology firms.
"We're optimistic, but we're cautious," said Archie, the Hoxton Group presenter introduced by Relder, summarizing the firm's view that two Federal Reserve rate cuts priced for 2025 could help bonds but that inflation risks and policy moves (for example tariffs) remain potential headwinds.
The firm reviewed the city's portfolios and historical performance. Relder said the residual fund's target allocation is roughly 50% stocks and 50% fixed income and reported the portfolio's year-end allocations as 51.21% equities, 43.22% bonds and about 5.5% in money-market instruments. He noted the residual fund's net invested amount rose from $516,000 (the start of the reported series) to $787,000 at year-end and that the residual fund returned 9.16% for the year (net of expenses).
Relder told the committee the police pension portfolio is managed more conservatively under a 35% stocks / 65% bonds mandate; the pension was at about 38.25% equities and had a year-to-date return of 8.01%, prompting a recommended rebalance toward bonds to meet the stated policy and liquidity needs of the pension.
Committee members asked practical questions about liquidity and how quickly the city could access funds. Relder said trades could be placed same day with wire settlement following the next business day and offered to help staff secure higher cash yields through short-duration CDs and government securities if the city wished.
The committee asked staff to provide an updated consolidated account balance at the next meeting; Relder cited the most recent available consolidated figure (Aug. 31) of about $18,000,000 and recommended routine rebalances to keep allocations aligned with the investment policy.
The committee did not take a formal vote on investment policy changes at the meeting. Members asked staff to return with updated account balances and potential cash-management options for committee consideration.
