Board of Finance reviews Q3 investment returns, raises target rate and approves routine quarterly motions

The Board of Finance heard the State Treasurer’s Q3 FY2022 investment report and approved a series of routine quarterly motions at its meeting. The Treasurer reported the long‑term portfolio — composed mainly of mortgage‑backed and government securities and corporate bonds — earned $16,500,000 for the quarter ending March 31, compared with $8,200,000 in the same quarter a year earlier. Total revenue for the quarter was $17,540,000 versus $9,050,000 the prior year.

The Treasurer said market drivers during the quarter included a robust labor market, the Federal Reserve’s initial rate increases and geopolitical volatility following Russia’s invasion of Ukraine. “Our strategy is to continue maintaining stability within the portfolio by watching the market closely, making decisions on a daily basis,” the Treasurer said.

Board investment staff noted the office’s quarterly book return was about 1.0%, with a recent monthly rate around 1.06%. Staff and the Treasurer attributed improved returns to rising interest rates and active duration management across short‑ and long‑term holdings.

As part of routine business, the board agreed by voice vote to several motions read by the chair: that no funds are available for deposit into the state Board of Finance certificate of deposit program; and a directive that the treasurer purchase warrants for the succeeding quarter (July 1–Sept. 30, 2022) pursuant to Act 1088 of 2013 while maintaining reasonable balances in demand deposit accounts and money market instruments for daily transactions.

The board also voted to raise the target long‑term rate of return for the April–June quarter to a new range of 1.00%–1.10% (previous target range cited by the board had been 0.85%–0.95%). The chair moved the rate change, members seconded, and the motion passed by voice vote.

Senior investment staff presented one change to the accrued broker list and recommended adding Bank of Omaha as a regional dealer. Board members raised questions about counterparty exposure to Russian markets; staff said the office has no direct ownership tied to that exposure and that some large dealers, including Citigroup, have been unwinding business connected to Russia. The board approved adding Bank of Omaha to the broker list by voice vote.

The motion votes recorded during the meeting were taken by voice; no roll‑call tallies were recorded in the transcript. The meeting adjourned after the board completed the day’s agenda.