November 05, 2015 at 12pm
Fort Worth’s investment portfolio of $1B is underperforming to the degree of $10M-$12M annually.
The return on the City of Fort Worth’s $1B investment portfolio returned a meager .6% in 2014 totaling roughly $6M. The inflation rate in that same year was 1.6%. The fund would have needed to return $16M just to stay even with inflation.
- Adjust the weighted maturity of 2.5 years. This time period does not match the time horizon of the investments purchased, nor the balance over that same period.
- Adjust the city investment standards that were last revised in 1994. The current standards are more restrictive than the state’s as well as the cities of Dallas and Houston. Both Dallas’ and Houston’s investment portfolios regularly out perform Fort Worth’s.
If the critically important and necessary adjustments outlined above cannot be accomplished, there are other viable options for utilizing the $1B that’s currently tied up in the underperforming portfolio. The first and most obvious would be for the city to pay down its debts. Additionally, we can lend that money internally to our own city departments instead of having these same departments going elsewhere to borrow at a higher rate.
My point in all this is, we need to be smarter about how our tax payer assets are managed.