PFM adviser says Rio Rancho’s permanent fund has strong recent returns, urges continued monitoring

Mallory Sampson of PFM told the Rio Rancho Investment Advisory Board on May 29 that the city’s permanent fund has benefited from strong market performance and a tilt toward large U.S. technology firms.

Sampson, presenting remotely, said the portfolio is managed as a 60% equity, 40% fixed‑income allocation and highlighted one‑year gains: "If you take a look real quickly at the 1 year number for the Russell 1,000 growth index, you'll see 39% return." She added that large-cap tech companies—what she referred to as the “Magnificent 7”—have driven much of the market’s gains.

WHY IT MATTERS: The permanent fund’s returns affect long‑term city finances and set expectations for what the board may recommend for reinvestment or use of earnings. Sampson reported the fund’s one‑year return compared favorably with its benchmark (14.87% vs. a 14.44% benchmark) and noted that quarter‑to‑date numbers were reported through March.

The presentation emphasized that market conditions remain mixed: domestic equities have been strong, international equities lag slightly, and fixed income has pockets of weakness tied to higher interest rates. Sampson said fixed‑income performance is slightly negative in some sectors "generally related to the expectation that interest rate cuts won't happen until later in this year." She recommended rebalancing decisions previously discussed and offered to go deeper into performance details as requested.

Board members asked about fees and expense ratios. Sampson said the fund’s underlying expense ratio is about 13 basis points and that PFM’s advisory fee is a flat $50,000 (which comes out of the general fund, she said): "13 basis points is the expense ratio. Our advisory fee is a flat 50,000." City staff confirmed PFM’s fee is paid from the general fund and that only state investment council fees are charged directly to the permanent fund.

Next steps: Sampson concluded the prepared remarks and invited additional questions. The board did not take action on the presentation itself but used the update to inform later items on policy and contributions.