County Pool Is Safe for Investors

[The June 1 letter from Gary A. Pulford, chairman of the Costa Mesa Treasury Oversight Committee] is ridden with material errors.

The letter was written by someone who portends to have a financial background. If he is having trouble understanding the [May 9] article, “Everyone Back in the O.C. Pool?” then perhaps others are as well. So allow me an opportunity to elaborate.

Let me first address the concern of benchmark comparisons provided by my office. The data was obtained from “Rated Money Fund Report,” a service of IBC Financial Data Inc., which is published monthly.

We compared ourselves to money market funds that are rated institutional, not retail; have a portfolio composition similar to ours, but not as conservative; hold assets in excess of $1.5 billion; and had their expense ratios published, in order to obtain net rates of return.

Based on the above, the Orange County Commingled Money Market Investment Pool placed second for the last three months in this category in comparing net rates of return.

There is no reason for the treasurer’s office to provide information that is inaccurate or untrue, especially when we have so many school district participants which have treasury oversight committees with very sophisticated members.

Our expense ratio has been between 12.7 and 15 basis points (from the 17.5 to 20 basis points when we were using the services of Salomon Bros. Asset Management). This is very competitive with the institutional funds in our benchmark category.

What makes my treasury staff’s efforts so commendable is that the gross yield achieved with our conservative investment policy statement is comparable to the institutional funds. We are bringing value to the county by our research, our competitive bidding, and our low expense ratio. We also provide more accounting and compliance services than money market funds. And our activities are fully disclosed in our monthly treasury management reports.

We are providing a low-risk money market fund with very low liability exposure. This investment opportunity should be a natural for outside participants like cities, especially when considering the cost efficiencies we are achieving.

Accordingly, I disagree with County Chief Executive Officer Jan Mittermeier’s opposition to allowing outside participants into our investment pool based on liability exposure. This is a safe and creative method of sharing expenses (reducing costs versus raising taxes) in which all county taxpayers win.

Our activities are open to public scrutiny and we provide reports to anyone that asks. Perhaps when a future letter writer disparages the tremendous efforts of my department, they will be better informed before they share what they “assume” and what “amuses” them, yet offends the well-meaning efforts of those sacrificing to make this a better county.

JOHN M.W. MOORLACH

Orange County Treasurer-Tax Collector