State Treasury touts $1.1 billion in earnings amidst BlackRock divestment

by | Jul 24, 2023

  • Florida’s state Treasury achieved a record-breaking earning of over $1.1 billion during the 2022-2023 Fiscal Year, the highest in the state’s history.
  • The record profits were attributed, in part, to the decision to divest $2 billion from money manager BlackRock and reallocate those funds to nine other managers based on risk-adjusted ratings.
  • Last week, the state of Florida was determined to have the best economy of all 50 states in America by CNBC in its ‘Top States for Business’ ranking.

Florida’s state Treasury reported on Monday that it generated more than $1.1 billion in earnings during the 2022-2023 Fiscal Year, amounting to the highest recorded total in state history.

Per the office of state Chief Financial Officer Jimmy Patronis, a contributing factor to the record profits was the decision to divest from money manager BlackRock. In December 2022, the Division of Treasury reallocated billions from BlackRock-managed assets in the long-duration portfolio to nine fund managers based on risk-adjusted ratings.

Florida’s $2 billion divestment — the largest of its kind by any state — came as a growing number of Republicans pushed back against environmental, social, and corporate governance (ESG) investment criteria, which lawmakers alleged to be a form of “woke capitalism.”

Across the six-month period from December 2022 to May 2023, the Treasury’s Long Duration Portfolio outperformed its benchmark by 41 Basis Points (2.415 percent vs. 1.996 percent).

BlackRock oversaw investments including corporate obligations, asset-backed securities, and municipal bonds. Unlike the externally managed portfolios which are managed by 12 different asset managers, BlackRock exclusively managed the Treasury’s $600 million Short Term Investment Fund (STIF), which is a cash sweep vehicle it uses to assist long-duration, intermediate-duration, and short-duration managers in directing cash on a daily basis.

The fund subsequently used any excess cash that a portfolio manager may have at the end of the day to invest into very short, very liquid securities.

“Florida’s investments are thriving thanks to strong fiscal stewardship and leadership in Tallahassee that is laser-focused on the bottom line and getting the best returns possible for taxpayers,” said Patronis. “This is an especially incredible accomplishment considering … unprecedented interest rate hikes in an attempt to fight record-breaking inflation and ESG scores.”

Last week, the state of Florida was determined to have the best economy of all 50 states in America by CNBC in its ‘Top States for Business’ ranking.

As of the latest annual evaluations, Florida’s GDP growth stands at 4 percent. Job growth has also experienced an upswing, with a 4.9 percent jump compared to 2021. The climbing indicators have culminated in Moody’s — an issuer of the credit quality of individual obligations or creditworthiness — assigning Florida a AAA stable debt rating and outlook, while corporate headquarters like CSX and Carnival facilitate consistent large-scale economic activity.

In 2022, Florida’s GDP was approximately $1.07 trillion, an increase from the year prior when the state’s GDP was recorded at $1.02 trillion.

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