The Farm Credit System Insurance Corporation (FCSIC) manages an investment portfolio to support its mission to protect investors in Farm Credit System debt obligations. FCSIC’s primary investment objective is to ensure adequate liquidity to meet its mission and only secondarily to optimize the rate of return on the investment portfolio. FCSIC’s Board of Directors has established an investment policy to ensure these objectives are met. (FCSIC’s investment policy). (pdf)
FCSIC is required by law to invest in obligations of the United States or obligations guaranteed as to the principal and interest by the United States. FCSIC’s investment policy limits investments to market-based Treasury securities and provides limits to meet investment objectives. For example, the investment portfolio is composed of a liquidity pool and an investment pool. The liquidity pool consists of short-term Treasury securities maturing in two years or less and must equate to at least 20 percent of the portfolio. The investment pool is composed of Treasury securities with maturities that vary from 2 to 10 years, and securities that mature in the 5 to 10-year range must not exceed 20 percent of the investment portfolio. Click here (pdf) to see the composition of the investment portfolio.
Insure adequate liquidity: FCSIC keeps the duration of the investment portfolio short to insure adequate liquidity to meet its mission objectives and to minimize interest rate risk. Click here (pdf) to see the duration and effective maturity of the investment portfolio at quarter-end over the past three years.
Rate of return: As a federal government insurer, FCSIC’s investment strategy is to minimize exposure to loss of principal and to maintain liquid investments. Operating within those parameters, we seek to maximize the income the insurance fund generates.