Town’s investment portfolio logs solid performance in 2025

The town of Longboat Key’s investment portfolio brings in hundreds of thousands of dollars in revenue each year, and even in uncertain economic conditions, the portfolio is performing consistently.

The town’s investment portfolio isn’t just extra cash it has laying around. Much of it is from debt issued to the town to pay for large projects. The town invests the money while the projects are planned and executed, and withdraws it to pay back the debts upon completion. In total, the town has $83.4 million in four accounts.

“These are the four pots of money we have that covers 30 different funds, so if we’re spending a bunch of money on an underground project, that would come out of those funds,” Finance Director Sue Smith said. “So big projects outside of the general fund, we would draw down from those balances. They’re all liquid.”

On those four accounts, in 2025 the town earned investment income of $3.11 million, had $642,695 in unrealized gains and paid investment expenses of $31,789 for a net investment income of $3,721,082. This amounts to a 4.46% return on the town's $83.4 million worth of investments.

At an investment advisory/finance committee meeting Friday, Chandler Asset Management Senior Portfolio Strategist Scott Stitcher updated the town on economic conditions and the state of Longboat Key’s $46.6 million account with the firm. In 2025, the town’s investments managed by Chandler Asset Management earned $488,427.

The town’s portfolio with Chandler Asset Management mostly consists of treasury bonds, which make up 48% of the account. Corporate bonds make up 24% of the portfolio, with the remaining 28% split between mortgage-backed securities, asset-backed securities and 8% of the portfolio in the federal home loan bank system.

That portfolio is built conservatively to avoid risk, something necessary by state law, and policy of the town’s finance department.

“We’re very conservative when we budget,” Town Finance Director Sue Smith said. “For example, this year for fiscal '26, we thought the feds were going to reduce rates, so we didn’t use what we were making today, we used something else predicting that those rates were going to come down. So, Longboat will have a surplus probably in fiscal '26 because those rates had not come down like in a normal setting.”

With Kevin Warsh set to replace Jerome Powell as Federal Reserve chair in May, there is uncertainty around interest rate changes, which has major impacts on the economy as a whole.

“What’s interesting about this is something I was reading about today said that every chairperson since (Alan) Greenspan replaced (Paul) Volcker back in 1987 has really emphasized continuity with that transition, continuity with their predecessor,” Stitcher said. “Warsh has been somewhat vocal in that he has promised to really have a clear break from J. Powell. Historically, Warsh has been an inflation hawk. He really wouldn’t hesitate to vote to raise interest rates, but the thought process is he’ll probably be a little more doveish in this go-around, and you’re likely to see him vote for easing. The challenge for him is there are 12 votes on the direction of interest rates. We are in the camp that we may see one rate cut in the next six months, 25 basis points.”