CAA Elects To Stay In The Pool

August 11, 2008
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GRAND RAPIDS — Members of the Convention and Arena Authority recently decided to stay the financial course and not change their investment policy.

For much of the past year, the board had been investigating whether a change in strategy could yield a higher return. But because the public body is limited by law as to the type of investments it can make and because its current policy is providing a better-than-average return on those investments, members decided to keep the board’s money where it is — in the Kent County investment pool.

“We can’t invest in equities,” said Birgit Klohs, CAA treasurer. “The county treasurer has done a pretty good job.”

County Treasurer Ken Parrish is managing nearly $470 million this year he has invested in government securities, pooled funds, money market accounts and certificates of deposits. He doesn’t invest with investment banks and doesn’t buy commercial paper.

The county’s average monthly return over the last 42 months, 4.14 percent, has been almost a point higher than the payout from the one-year U.S. Treasury note. The county’s monthly return this year has ranged from 4.70 percent in January to 4.11 percent in April, while the T-note yields have ranged from 2.87 percent to 1.56 percent over the same four months.

“There is no reason to change the investment policy at this time,” said Robert White, Kent County fiscal services director and CAA staff member.

The CAA considered hiring its own money manager, but concluded that the difference it might get with a higher return would end up being spent to cover management charges.

“We can make a point extra and we will spend it on fees,” said Klohs.

Klohs added that the CAA was getting a good rate of return and its investments offer the board nearly instant liquidity.

The CAA joined the county’s investment pool in 2004. As of the end of April, the board had about $21.6 million in the pool. The CAA budget estimated interest income for FY09 will be $742,000.

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