• Reducing Risk in Your Operational Fund​​​​​​​

Minimize your risks

In order to take risk out of a portfolio, you need to define the risk. Take a look at the portfolio risk document for some ideas on ways to look at you potential risks.

Although you have multiple risks to consider, first look at the interest-rate risk. I’ve watched portfolios lose millions because no one considered the interest-rate risk. Understanding this risk and having a strategy for dealing with it is imperative to avoid falling into the trap of going longer-term when you should be shorter, and shorter-term when you should be longer.

To minimize your risks, you need to diversify your investment maturities, which you can do by using one of three strategies: matching, laddering, or barbell. I talk more about these strategies later, but for now, just remember that the key to minimizing risk is to diversify. Don’t put all your investments in short-term security or all in long-term investments, unless there’s a specific reason spelled out in your written strategy.

Get help if you need it

If you don’t know what you’re doing, for the sake of the taxpayers and your job, find someone who does.

It’s okay to ask for help from a professional in the marketplace, and many can do a lot more for you than simply give you a bid on an investment. A professional can help you with your investment strategy, and in some cases, you can turn over the strategy to that expert completely.

If you are of the mindset that you know all there is to know about investing a public fund portfolio and don’t need any help, you’re not likely to improve your investment results.

For a limited time, PFITR is offering Public fiduciaries a one-week trial of our Bond Price Validation Technology for free. You’ll be able to make better investment purchases and save significant taxpayer’s dollars with unmatched market transparency from Bond Price Validation.