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Tax-Exempt Bond Proceeds Investment Pool
The Tax-Exempt Bond Proceeds Investment Pool comprises pooled assets received through the issuance of tax-exempt State of New Mexico general obligation bonds, severance tax bonds, and supplemental severance tax bonds.
The fund's objective is to preserve capital, provide liquidity, and generate returns relative to the true interest cost of all State of New Mexico debt outstanding and in accordance with the Investment Policy of the Office of the State Treasurer.
Funds are invested utilizing a two-tiered money market and enhanced cash strategy which, first, aims to preserve capital and provide liquidity by investing in short-term fixed income securities with the highest investment grade ratings (Aaa), and, second, aims to earn excess returns relative to traditional money market strategies by slightly increasing maturity, slightly increasing duration, slightly increasing price volatility, and allowing for a broader range of investment grade characteristics (A rated or above).
The first tier, managed according to a money market strategy, serves as a liquidity portion of the fund, providing for a cash buffer, and cash matched monthly state project expenditures and bi-annual debt service payments between three and twelve months forward.
The second tier, managed according to a cash enhanced strategy, serves as a supplement to the money market tier and may seek somewhat higher yields through active risk management and through the selection of appropriate liquidity, credit, and volatility premiums found in the market place. Although an enhanced cash strategy provides for greater flexibility and potential returns, its use is reserved for a credit market environment whereby the yield on U.S. treasuries and agencies are below the highest true interest cost of outstanding State debt. The second tier of the fund will resemble a ladder whereby the State's debt service payments are cash matched between one and three years forward.
Taxable Bond Proceeds Investment Pool
The Taxable Bond Proceeds Investment Pool comprises pooled assets received through the issuance of State of New Mexico severance tax bonds.
The fund's objective is to preserve capital, provide liquidity, and generate returns relative to a benchmark and in accordance with the State Treasurer's Investment Policy.
Funds are invested utilizing an enhanced cash strategy that, first, aims to preserve capital and provide liquidity by investing in short-term fixed income securities with the highest investment grade ratings (Aaa), and, second, aims to earn excess returns relative to traditional money market strategies by slightly increasing maturity, slightly increasing duration, slightly increasing price volatility, and allowing for a broader range of investment grade characteristics (A rated or above).
Except for the cash reserve that serves as a liquidity buffer, the fund will be entirely laddered out, cash matching the State's anticipated project expenditures between three to eighteen months forward.
General Fund
The General Fund is the State of New Mexico's main operating account. All State revenues are credited to the General Fund. Income taxes, sales taxes, rents and royalties, and other recurring revenues are deposited into the fund. The fund also comprises numerous State agency accounts whose assets, by statute, must be held at the State Treasury. Expenditures are disbursed only in accordance with appropriations authorized by the State Legislature.
Monies not needed immediately to support the operations of the State are put to work bearing interest to add revenue to the State. Monies are invested with safety as the main overriding priority. The next priority is given to liquidity to ensure liquid funds are available to pay State obligations as they arise. The final priority is return. Dollars are invested to maximize earnings while always remaining in compliance with the State's two main priorities of safety and liquidity.
The General Fund is further segmented into four sub-funds each with its own focus:
Liquidity Management Portfolio: This portfolio consists of short-term money market investments cash matched to the expenditures of the State. By ensuring that investments mature on or before disbursements dates, higher rates of interest can be earned safely while meeting the State's expenses.
Core Portfolio: Other dollars not needed to cover immediate needs of the State can be invested for longer periods of time to achieve higher rates of interest often associated with longer term investments. Investments in this portfolio must be of A rated credit quality or higher and may only be for terms of 5 years and less.
CD Program: To augment the development of the State's economy, the Treasurer's Office purchases certificates of deposit from New Mexico banking institutions. Upon the posting of sufficient collateral, local banks may obtain funding to loan into their local communities. This program helps support New Mexico-owned and -operated financial institutions and supports economic activity in the State's smaller communities.
TRANs Redemption Fund: This fund comprises dollars set aside over the course of the year to pay off the State's Tax and Revenue Anticipation Notes. These obligations are issued during the year to cover temporary shortfalls in the State's appropriations account. If there are any Tax and Revenue Anticipation Notes outstanding, the obligations are redeemed on June 30 of the fiscal year. The TRANs Redemption Fund holds A rated or better investments cash matched to the maturity dates of the TRANs.
New MexiGROW Local Government Investment Pool
The New MexiGROW Local Government Investment Pool (LGIP) is a AAA rated money market fund offered by the State Treasurer to eligible local public bodies. The Treasurer's ability to combine moneys received from local public entities into an investment pool offers greater purchasing power and the economy of scale necessary to secure the highest available yields.
The New MexiGROW LGIP is rated annually by Standard & Poor’s. All securities purchased for the LGIP portfolio comply with the State Treasurer’s Investment Policy, which is approved by the State Board of Finance. Investment type, asset mix, diversification, weighted average maturity, investment credit quality, and approved broker/dealers are elements of the Investment Policy. The LGIP may purchase U.S. Treasury and Agency securities, A-1+ commercial paper, AAA rated money market funds, overnight repurchase agreements, A+ or better corporate bonds, certificates of deposit, and asset-backed obligations, all of which must have a stated maturity of less than 397 days. Holdings in commercial paper, corporate bonds, and asset-backed securities are limited to no more than 40% of the portfolio and no more than 5% per issuer; individual money market fund holdings are limited to no more than 25% of the portfolio; holdings in U.S. Agency securities are limited to no more than 35% per issuer; and the weighted average maturity of the portfolio must be 50 days or less.
The investment strategy for the New MexiGROW LGIP involves investing short-term funds in compliance with the Investment Policy and in a manner that will minimize risk and enhance return. Liquidity management ensures adequate funds are available when needed. Maturity laddering and asset diversification are employed to optimize earnings. The overriding investing principles for the New MexiGROW LGIP are safety, liquidity, and return.
New MexiGROW LGIP Facts as of August 31, 2007:
Inception date - 1987
Total net assets - $1,024,754,685
Weighted average maturity - 31 days
S&P rating - AAAm
Quarterly net yield - 5.29%
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