The Illinois Funds
The Illinois Public Treasurer's Investment Pool (IPTIP)
Investing on behalf of state and local governments
The Illinois Public Treasurers’ Investment Pool (referred to as “The Illinois Funds”) is a local government investment pool (LGIP) operated by the Office of the Illinois State Treasurer for state and local government agencies.
This program provides a critical service for state and local agencies, enabling them to pool their money and invest in a safe, liquid investment vehicle that exceeds industry benchmarks, and has received the highest rating (AAAmmf) from national credit ratings agencies.
Created in 1975, The Illinois Funds was one of the first local government investment pools established in the nation.
The Illinois Funds is comprised of approximately 1,500 participating entities, holding over 3,000 accounts, with net assets of over $15 billion.
Monthly Investment Summary
As of April 28, 2023
• Net Portfolio Assets*: $ 18,450,785,473
• Present Market Value: $ 18,430,858,986
• Monthly Investment Earnings: $ 74,575,382
• 7-Day Effective Yield**: 4.905%
• One Month Gross Yield: 4.940%
• One Month Effective Yield**: 4.866%
• Net Asset Value (per share): $1.00
• Weighted Average Maturity: 54.5 days
• Weighted Average Life: 104.6 days
*This total includes a State Investment of $ 10,377,651,798
**Yield, Net of Fees
Illinois Funds Performance Update
2023 1st Quarter
Analytical Comment
Since 2020, the Federal Reserve Bank have been taking aggressive actions on the Federal Funds rate to counter-balance gyrations in the pandemic-inflected economy—first dropping the rate to 0.0-0.25% in March 2020, then, since March 2022, raising the overnight rate to 4.75-5.0%. Rising rates can have different effects on a portfolio, depending on the overall position a holder has. Regional banks have received a lot of interest (as it were) in the last few weeks of the quarter—mostly attributed to the collapse of Silicon Valley and Signature Banks. (SVB held over $21b in 30-year Treasuries, but had to sell them at a loss all at once when depositors were demanding $100b in deposits).
But, because of state statutes and our own investment policies, the weighted average maturity (WAM) of The Illinois Funds’ portfolio in the first quarter 2023 remained under 60 days, with daily liquidity ratio remaining above 30% for the quarter, ensuring that sufficient funds are available for Participant needs. The continued rise of interest rates has brought in over $206m in net income to Participants for the Quarter, in contrast to less than $5m for the same period last year. We will continue to monitor the potential effects of actions in Washington on financial markets and our Portfolio's position.
Brenton Siemons
Director, State Investments
Edit: The failure of First Republic Bank happened after the publication of the 1Q23 comment, but shares essential qualities with Silicon Valley Bank situation--1) investment positions that did not adequately take into account the risk of interest rate increases; 2) insufficient regulatory supervision to monitor banks' status; 3) insufficient capital to meet demand deposit withdrawals.
Benchmarks
The Office of the Illinois State Treasurer uses industry benchmarks to ensure dollars are placed in safe, yet lucrative, investments. The Illinois Treasurer's goal is to consistently outperform the competition and exceed benchmarks.
These graphs compares the yield on the Illinois Funds' [Local Government Investment Pool (LGIP)] portfolio to a blended benchmark produced by the Treasurer’s Office. The blended benchmark reflects the actual mix of assets in the Illinois Funds portfolio. For example, if the Illinois Funds invested half of its assets in Repurchase Agreements, 25% in US Government Agency debt, and the other 25% in Commercial Paper, this benchmark would combine standards from each of those asset classes to produce a new, blended standard. This is the most accurate indicator of the Illinois Funds' overall portfolio performance.
Inventory Reports
Below are links to inventory reports from the last three months, each listing individual holdings as of the reported date: