News | New Mexico State Treasurer's Office

There seems to be a number of misconceptions regarding how the State Treasurer’s Office (STO) manages the operating funds of the state and the New MexiGROW Local Government Investment Pool (LGIP), as well as the performance of those investments. Unlike most other investing agencies of the state, STO does not contract with outside money managers to manage its portfolios and instead relies on qualified staff to invest those funds not required for daily operating purposes. STO is proud of the fact that all of its portfolios have realized a positive total return for the past five years and can with confidence repudiate all rumors that we have lost millions of dollars.

Subject to the state treasurer’s statutory investment authority, it is the responsibility of the state treasurer to enhance state revenues through the prudent investment of public money that is not immediately required for the operations of state government. All investment decisions are made in observance of the following principals in this order: Preservation of invested principal, maintenance of liquidity to satisfy operational requirements of state government, and maximization of return in accordance with the above listed priorities and the approved State Treasurer’s Investment Policy.

In order to carry out this mission, STO does not contract with outside money managers to manage its portfolios. All market research, security analysis, development and implementation of investment strategy is conducted by STO personnel. All STO portfolio managers hold the designation of Chartered Financial Analyst (CFA), or are working toward such designation, and have advanced degrees in either finance or economics. The STO portfolio managers have extensive experience in analysis and management of fixed income securities. It is the belief of STO portfolio managers that internally managing fixed income portfolios is economically more efficient and creates a level of accountability and personal responsibility that may be absent when contracting with outside managers.

STO also does not rely on the services of third-party marketers. All investments are made through a competitive process involving only approved broker/dealers. Before being recommended to the State Treasurers Investment Committee and the State Board of Finance for approval, a broker and their firm must meet criteria outlined in the investment policy and must submit to a background check that searches for any criminal activity, regulatory actions by government agencies, and suspensions of license. Additionally, an approved broker/dealer must certify that they are familiar with and comply with all STO policies and state laws regarding ethics and conflicts of interest and must disclose any campaign contributions made to the state treasurer, any employee of STO or any member of the State Board of Finance who is an elected official or running for elected office.

It is due to the guidance of the approved investment policy and the prudent and conscientious attention paid by internal STO portfolio managers, that STO’s portfolios have realized positive total returns for each of the last five years. All portfolios, with the exception of the LGIP, are currently outperforming their benchmarks. This exception is due to deliberate actions by STO portfolio managers to overweight the portfolio in short-term, liquid Treasury securities in light of current economic and market conditions. In short, the LGIP portfolio is being managed in a much more conservative fashion than is its benchmark.

Current economic conditions have kept the financial markets and investing agencies within the state in the headlines. STO remains steadfast in its role as the guardian of state operating funds. We view our charge as inviolable and will continue to manage these funds with the prudence and diligence that all New Mexicans should expect.
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