Sussex County’s new investment portfolio strategy is producing improved returns.
Late last year, the county starting investing excess cash and reserve funds in government-backed agencies – such as Federal Farm Credit Bank – instead of bank money market accounts. Based on last quarter’s returns, the change could see investment income more than quadruple during the coming year.
In the past, the county did not invest those funds but instead purchased CDs. When CD interest rates dropped, the county's only other alternative was to put the funds in money market accounts, said County Finance Director Susan Webb.
Webb said the projected $530,000 in annual returns – based on .76 percent interest – is a major increase from the projected $100,000 investment income from money market accounts with an interest rate of .15 percent.
But that’s still a far cry from investment income just six years ago, Webb said, when the county collected $4 million in interest just from bank accounts. That's when CDs were paying 5 percent and 6 percent, she said. Today, the interest rate for most CDs is about 1 percent.
Dominick D'Eramo, director of Wilmington Trust Fixed Income, told Sussex County Council at its Feb. 19 meeting that the amended plan would increase gains and still maintain the county's conservative approach to investing. D'Eramo said safety of the county's principal was the highest priority.
Webb said county council would receive quarterly reports from Wilmington Trust.