Glendale’s investment portfolio ended the fiscal year in June at $393 million, down $16 million from the same period last year, according to a city report released this week.
The city’s investment returns have been stifled by low interest rates and a still struggling economy.
“We haven’t lost $16 million, we have spent $16 million, but that hasn’t been replaced,” said City Treasurer Ron Borucki. “More dollars flow out of the portfolio than are coming in.”
The city’s interest earnings for the year finished at $4.3 million, down from $5.8 million in the previous year.
At a City Hall meeting on Tuesday, City Manager Scott Ochoa called the fiscal year-end report “less than stellar news.”
Interest rates have been historically low for the past four years and that is unlikely to change any time soon, Borucki said.
The Federal Reserve has kept interest rates historically low to spur borrowing, and in turn, boost the economy. But that means the city reaps less from its investments — mostly corporate and government bonds. Without interest rates moving higher, it’s likely Glendale’s investment portfolio will experience a similar fate this fiscal year, according to the city report.
The rate of return fell to 1.09% from 1.43% for the year. Although upsetting, the tumble was better than expected. Borucki said increasing the share of corporate notes to 15% from 7% over the year helped buoy the rate of return.
-- Brittany Levine, Times Community News