Miami-Dade County’s investment portfolio delivered healthy returns of $47.3 million in fiscal 2021-2022, an increase of $37.6 million over fiscal 2020-21, said Christopher Hill, the county’s director of cash management. doing.
Earnings reflected an average return of 0.61% for the fiscal year ended September 30, 2022, Hill said, bringing the county’s portfolio balance to $7.8 billion.
“As of January 1, 2023, the investment portfolio had a month-to-date rate of return of 3.76%, suggesting significant earnings growth for the current fiscal year,” Hill forecasts to Miami Today.
Hoping the Fed will take a less aggressive stance on rate hikes in 2023, counties may consider extending the maturity “when investment opportunities present themselves,” he said. he said.
However, Hill’s caution with investing is that the county’s primary investment objective is to “maintain liquidity and security of principal.” The county “seeks to maximize revenue,” he notes, but that’s “secondary to its primary objective.”
Maturity is the date on which the life of a financial instrument ends. According to Federalreserve.gov, extending the average maturity “should reduce the supply of long-term government bonds in the market and put downward pressure on long-term interest rates,” which would “contribute to broader easing in financial markets.” explains. “Market conditions will further support the economic recovery,” he said.
“One reason to consider extending maturity is that if you think the Fed might start cutting rates, as in a recession, you might want to keep current rates longer,” Hill told Miami Today. It’s a fixed term,” he said.
“Recent projections call for the Fed to continue raising rates through early 2023, then through late 2023, and begin cutting rates in 2024 and 2025.” We expect the weighted average days of maturities to remain relatively short in the first quarter of 2023, but have started to cautiously extend maturities as 2023 progresses.”
Mr. Hill warns: In that case, the county’s “strategy should be adjusted accordingly.”