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Quarterly Investment Update Publication
Volume VII Issue I, January 1, 2003Publisher:
Dorothy H. Wilken, Clerk .............................................................355-2996
Editor:
Felicia Landerman, Investment Manager.........................................355-4412
Contributors:
Arnfield Cudal, Investment Analyst................................................355-3458
Candace Mansfield, Cash Management Clerk...................................355-3643
Gail Whited, Investment Clerk......................................................355-4049
Lorie Clinger, Investment Secretary..............................................355-2906
Published at:
301 North Olive Avenue
West Palm Beach, FL 33401
INVESTMENT STRATEGY
As of December 31, 2002, the consolidated portfolio managed by the Clerk's Finance Department was $1.519 billion and the overall book yield was 3.46 percent. The long-term fund balance was $1.008 billion with a book yield of 4.34 percent as compared to the Investment Policy Committee benchmark, the 12 month moving average of the 2 year U.S. Treasury Note yield of 2.62 percent. The short-term fund totaled $511 million and yielded 1.69 percent, as compared to its benchmark, the State Board of Administration's Florida Local Government Surplus Funds' yield of 1.64 percent.
During the past quarter, we began to implement a more dynamic analysis of our pending cash flows given various assumptions to changes in interest rates. We factored into this analysis the pending cash receipts from tax revenues. During the past month, we received approximately $348 million in Ad Valorem taxes, with an estimated $190 million additional receipts planned for the 2003 fiscal year. Our goal continues to be the most effective management of funds within our policy objectives – to maximize income potential while maintaining our priority of safety of principal and liquidity.
We continue to perform in-depth analyses of fiscal year 2003 estimated cash flows (stressed against a steady interest rate scenario, a rising-rate scenario and a combination of both). To provide for the most efficient management of longer-term funds, we will continue to dynamically monitor our predicted cash flows on a monthly basis and to match these up against our pending liabilities. This process will allow us to efficiently monitor the markets and the resulting effects on our portfolio, with the ultimate goal of meeting our liquidity needs while increasing income. Even with an overwhelming prospect for an eventual rising interest rate environment, our longer-term funds are positioned in such a way that if rates begin to rise, we will have consistent amortizing cash flows from our mortgage securities. We continue to position our funds to be able to react to any drastic changes in interest rates. Sufficient "cushions" have been built into the model to allow for unexpected sharp increases in interest rates and any resulting extension of the overall portfolio.
Throughout the past quarter, we have continued our investment strategy of utilizing a diversified mix of mortgage-backed securities (both fixed and adjustable rate) and shorter-duration callable agencies. In addition, we purchased a $10 million block of AAA-rated General Electric corporate paper, providing attractive spread income with a bullet-maturity structure. Moving forward, we will seek similar opportunities.
DOROTHY H. WILKEN
Clerk to the Board of County Commissioners
4th
Quarter Investment Update
- Consolidated Portfolio Distribution
- Historical Yield Comparison
- Treasury Yield Curve
- Key Interest Rates
- Investment Strategy Update
- Economic Update
- Read the Report in its Entirety
Finance Department:
Finance Department Minutes Division 2nd Quarter Report FY 2002 3rd Quarter Report FY 2002 4th Quarter Report FY 2002 1st Quarter Report FY 2003
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