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Public Fund Investing 2010

Public Fund Investing 2010. Puget Sound Finance Officers Association Doug Extine Deputy State Treasurer February 10, 2010. Agenda. Where are we and how did we get here? When will we leave and where will we go? How will we get there? How long will it take to get there?

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Public Fund Investing 2010

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  1. Public Fund Investing 2010 Puget Sound Finance Officers Association Doug Extine Deputy State Treasurer February 10, 2010

  2. Agenda • Where are we and how did we get here? • When will we leave and where will we go? • How will we get there? • How long will it take to get there? • How can I prepare for the trip?

  3. Agenda • The current interest rate cycle • Can past cycles tell us what to expect going forward? • How can I effectively manage my portfolio over the next year or two? • What can I learn from this that will make me better in the future? • The value of discipline

  4. OST NEWS • 2010 Legislative Agenda • LGIP • OST CD Program • Update on the PDPC and the TAG Program • SEC proposed changes to 2a-7 guidelines • Weighted Average Maturity (WAM) • Weighted Average Life (WAL) • Liquidity Mandates • LGIP Extended Asset Option

  5. Portfolio Management 2010 • Objectives - Safety, liquidity and yield • There is no map for this trip • Drive defensively • Risk in the current environment is quite asymmetrical • MANAGE YOUR DURATION • Keep your eyes on the right benchmark

  6. Where Are We And How Did We Get Here?

  7. Where Are We And How Did We Get Here?

  8. Where Are We And How Did We Get Here?

  9. Portfolio Management 2010 • Objectives - Safety, liquidity and yield • There is no map for this trip • Drive defensively • Risk in the current environment is quite asymmetrical • MANAGE YOUR DURATION • Keep your eyes on the right benchmark

  10. What Does History Tell Us? Yield Curves and the Last Cycle

  11. What Does History Tell Us? Yield Curves and the Last Cycle

  12. Portfolio Management 2010 • Objectives - Safety, liquidity and yield • There is no map for this trip • Drive defensively • Risk in the current environment is quite asymmetrical • MANAGE YOUR DURATION • Keep your eyes on the right benchmark

  13. Market Expectations: Interest Rates to Increase

  14. Interest Rates Can Increase Rapidly Even With No Fed Activity2-year Treasury Yields2-year Treasury leads Fed moves in tightening cycles by ~ 6 months

  15. Portfolio Management 2010 • Objectives - Safety, liquidity and yield • There is no map for this trip • Drive defensively • Risk in the current environment is quite asymmetrical • MANAGE YOUR DURATION • Keep your eyes on the right benchmark

  16. MANAGE YOUR DURATION Beware of the Pretty Mushrooms

  17. Investing Out the Curve – Timing Does Matter

  18. Investing Out the Curve – Timing Does Matter

  19. Investing out the Curve The Value of Discipline … and Keeping Your Eyes on the Right Benchmark

  20. Investing out the Curve The Value of Discipline

  21. Portfolio Management 2010 • Objectives - Safety, liquidity and yield • There is no map for this trip • Drive defensively • Risk in the current environment is quite asymmetrical • MANAGE YOUR DURATION • Keep your eyes on the right benchmark

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