NCUSIF investments: Repeating the practice that caused the current underperformance

I’m afraid I must rant again about NCUA’s management of the NCUSIF investment portfolio.

From the most recently posted financials as of February 2024, the Investment Committee appears to have learned nothing from the past two years of Fed Reserve short-term rate increases.

The Committee bought a $650 million Treasury bond yielding 4.26% with a final maturity of 6 years and three months on February 15.

The investment extended the NCUSIF’s duration, increased the portfolio’s interest rate (IRR) risk, and reduced short-term liquidity. The term portfolio (75% of the $22.5 billion total) is underwater by $1.3 billion and yields just 1.44%. the Fund’s overnight position in contrast earned an average yield of 5.41% in February.


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