Receive and file the Yolo County Treasurer's Report on Investments for the quarter ended March 31, 2026. (No general fund impact) (Haynes/Sorensen)

Receive and file the Yolo County Treasurer's Report on Investments for the quarter ended March 31, 2026.

The County Treasury investment portfolio is summarized in Attachment A (Investment Summary) and includes the Treasurer's Investment Pool and the investment accounts managed by the Treasury that are not pooled together for investment returns. The pooled portfolio includes county funds, deposits from special districts, and school districts, totaling $930 million as of March 31, 2026.  

The portfolio consisted of 1% ($9 million) in cash at the bank, 22.4% ($208.8 million) in short-term investments in government investment pools such as the Local Agency Investment Fund (LAIF) and the California Asset Management Program (CAMP), and 76.6% ($712.4 million) in an investment pool that is actively managed by the County’s investment advisor, PFM Asset Management, LLC (PFM). These investments consist mostly of fixed income securities as authorized by government code, such as: U.S. Treasuries; securities issued by federal agencies, such as Fannie Mae, Freddie Mac, and Federal Home Loan Bank; corporate notes; commercial papers; and certificates of deposit.

The investment details for the pooled portfolio along with the investment performance are shown in Attachment B (PFM Performance Report) while the non-pooled holdings are shown in Attachment C (Non-pooled Holdings).  The non-pooled portfolio of $156.5 million consists of specific investments for various entities and programs. These include $45.5 million in government medium-term funds (LAIF and CAMP) for various districts and the 2017 Lease Revenue Bonds, $30.7 million in investments managed by PFM for various county programs (Landfill Closure, Cache Creek, etc.), $80.2 million in section 115 trusts held by PARS for County OPEB (Other Post-Employment Benefits) and pension funding, and $44.8 thousand in cash in money market accounts.
 

PFM reported that in the first quarter of 2026, markets shifted sharply after conflict erupted in Iran on February 28, disrupting traffic through the vital Strait of Hormuz and driving crude oil prices up more than 60% in March, which in turn fueled volatility, equity sell-offs, and higher interest rates as inflation expectations rose. Despite the geopolitical turmoil, the Federal Reserve kept its policy rate unchanged and maintained expectations for one rate cut in 2026, while acknowledging that elevated energy prices complicate its inflation-employment mandate. Inflation progress stalled, labor markets remained steady with modest job gains, and late 2025 economic growth proved resilient thanks to solid consumer and business spending. Treasury yields rose significantly, pressuring longer-duration bonds while shorter-duration instruments delivered modest positive returns. Sector performance was mixed: corporate bonds weakened amid risk-off sentiment, while asset-backed, mortgage-backed, and agency-backed sectors generally held up better, with longer-duration mortgage and commercial MBS leading investment-grade performance for the quarter.

Certification

The Yolo County investment pool is in compliance with the Yolo County Investment Policy. Our analysis indicates that the investment holdings in the Yolo County Investment Pool are of proper amount and duration to meet the estimated cash flow requirements of the County and all pool participants for the next six months, barring substantial cash payment deferrals from the State government or other unforeseen cash needs.

Other agencies with deposits in the pool include: school districts, special districts, and cities. A copy of the report is posted and available on the Department of Financial Services website. The Financial Oversight Committee reviews investment performance quarterly. All reports from the County's investment advisor, PFM Asset Management LLC, are available in the County Treasurer's office.