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, at least 40 percent of the investment portfolio must be in Treasury securities that mature within 2 years. We also limit investment in Treasury securities with maturities of between 5-10 years to no more than 20 percent of the portfolio, and we do not invest in Treasury securities with maturities beyond 10 years. The recent composition of the investment portfolio is available in the attached file (PDF).
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.