Arkansas treasury reports $93 million in Q2 investment earnings; board raises book-return target
January 30, 2024 | Arkansas State Treasurer's Office, Arkansas
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Treasurer Larry Walman told the State Board of Finance that the Arkansas Treasury portfolio now exceeds $11 billion and that the office recorded $93,000,000 in investment earnings for the second fiscal-quarter. "Safety of our money is the primary focus of the treasury," Walman said, adding that liquidity is the second priority and return third.
The update came during a presentation by Steven Fieldmore, director of investment accounting, who detailed recent yield trends and accounting measures. Fieldmore reported a midpoint book return of about 3.357% annualized and a total return near 2.918% (the latter includes unrealized market-value changes). He said portfolio net income rose from roughly $90.5 million in Q1 to nearly $96 million in the most recent quarter, putting midyear investment net income at about $186,430,000.
The investment team described the portfolio allocation and risk posture: mortgage-backed securities comprise a large allocation, the portfolio’s duration is positioned just under five years, and short-term holdings have supported higher near-term yields. Senior managers noted the portfolio has increased operational liquidity to help absorb market volatility and to provide principal cash flows if tax revenues fall below projections.
Against that backdrop, board staff proposed a modest upward adjustment to the target range for book return value for the January–March 2024 quarter, moving the target from 3.25%–3.35% to 3.30%–3.40% to reflect recent market movements and an expectation of lower rates over the medium term. Following a motion and second, the board voted to set the new target range; the motion carried by voice vote.
The board also approved routine administrative items related to cash management, including a recommendation that no funds be deposited in the State Board of Finance certificate of deposit program for the April–June 2024 quarter and authorization to purchase warrants for the same period pursuant to Act 1088 of 2013. The treasurer’s report was approved as submitted.
The board’s next meeting is scheduled for April 22, 2024.
The update came during a presentation by Steven Fieldmore, director of investment accounting, who detailed recent yield trends and accounting measures. Fieldmore reported a midpoint book return of about 3.357% annualized and a total return near 2.918% (the latter includes unrealized market-value changes). He said portfolio net income rose from roughly $90.5 million in Q1 to nearly $96 million in the most recent quarter, putting midyear investment net income at about $186,430,000.
The investment team described the portfolio allocation and risk posture: mortgage-backed securities comprise a large allocation, the portfolio’s duration is positioned just under five years, and short-term holdings have supported higher near-term yields. Senior managers noted the portfolio has increased operational liquidity to help absorb market volatility and to provide principal cash flows if tax revenues fall below projections.
Against that backdrop, board staff proposed a modest upward adjustment to the target range for book return value for the January–March 2024 quarter, moving the target from 3.25%–3.35% to 3.30%–3.40% to reflect recent market movements and an expectation of lower rates over the medium term. Following a motion and second, the board voted to set the new target range; the motion carried by voice vote.
The board also approved routine administrative items related to cash management, including a recommendation that no funds be deposited in the State Board of Finance certificate of deposit program for the April–June 2024 quarter and authorization to purchase warrants for the same period pursuant to Act 1088 of 2013. The treasurer’s report was approved as submitted.
The board’s next meeting is scheduled for April 22, 2024.
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