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Investment firm tells North Riverside trustees portfolio returned above benchmarks, recommends extending duration
Summary
Gary Arshnath of Capital Gains reported that the village's bond portfolio returned roughly 2.86% fiscal and about 4.54% calendar year compared with blended benchmarks, and recommended extending average maturity to lock in ~4% yields while retaining liquidity for cash needs.
Gary Arshnath of Capital Gains presented the village's investment performance and strategy, saying last year’s portfolio outperformed its blended benchmark and describing a proactive approach to locking in current yields.
"We were over 5% around 5 40 rate of return," Arshnath said, summarizing prior performance. He provided fiscal and calendar year figures: a 2.86% fiscal‑year rate of return versus a 2.58% blended benchmark and a 4.54% calendar‑year return versus a 3.65% blended benchmark. Arshnath said the portfolio has a short average maturity (roughly one year) with about 78% of securities rolling off in one year; his recommended approach is to extend duration to pick up higher yields out to two to three years while keeping smaller, front‑loaded positions to preserve liquidity.
Trustees asked about exposure to sectors tied to artificial intelligence and data centers; Arshnath noted municipal bonds tied to utilities or infrastructure could provide a pathway, but corporate bonds are restricted under local investment statutes. He emphasized balancing yield with liquidity to avoid selling bonds at a loss if rates rise.
