Treasurer of State Dennis Milligan Announces 2nd Quarter Earnings
Treasury maintains stable foundation despite pandemic
Feb. 9, 2021 (Little Rock, Ark.) – The State Treasury earned $8.39 million during the second quarter of fiscal year 2021, which was from October through December 2020. The receipted earnings now total $408 million since Milligan took office in 2015. Like many investment portfolios, the global pandemic is still affecting the state’s returns, Treasurer of State Dennis Milligan told the State Board of Finance today.
“Before Covid first impacted the United States and the Fed took interest rates down to 25 to zero basis points, our short-term portfolio was getting a weighted average yield of roughly 200 basis points, or 2 percent. In comparison, our short-term portfolio is now getting less than 20 basis points, or less than one-quarter of a percent,” Milligan said. “This is just one example of the unfortunate effect of the pandemic on our portfolio.”
The treasury’s $4.5 billion investment portfolio consists largely of commercial paper and mortgage-backed securities backed by the federal government. However, Milligan has diversified the portfolio over the past several months, allowing it to remain stable and see positive growth amid the economic uncertainty of the pandemic.
“We have been able to maintain a solid-performing portfolio despite the current interest rate environment,” he said, yet cautioning that the economic recovery would be slow. Since the state is statutorily limited to investing strictly in the fixed-income market, it will not see as sharp of a recovery as the stock market has in recent months.
“We operate within the fixed income market where the risks are less and the investments are more secure, but the return on those investments are lower than they are in a booming stock market,” Milligan explained. “So while people might be seeing some good strides in their retirement accounts, it’s likely because it includes a mixture of stocks and bonds. And since we operate in the fixed income market, which consists of only bonds or fixed-return securities, we’ll see a much slower recovery.”
But while slower to achieve, the recovery will likely be more secure, he added.
“In the meantime, we’re continuing to lay a solid foundation that the State Treasury can rely upon for years to come, and that’s something we’re proud of.”
Dennis Milligan was elected Treasurer of State in 2014 and re-elected in 2018. The State Treasury is responsible for overseeing the state’s $4.5 billion portfolio. Since taking office in 2015, Milligan has receipted the state more than $400 million in investment returns and has grown the investment portfolio’s receipts to record highs. www.artreasury.gov.