Cynthia D. Penny-Ardinger Jeffrey S. Rosen Samuel D. Snead, MCP MA John F. von Paris
MEMORANDUM
TO:
MDTA Board
FROM: SUBJECT:
Director of Treasury and Debt Kevin Cullity Investment Strategy and Benchmarks
DATE:
November 25, 2025
PURPOSE OF MEMORANDUM The purpose of the memorandum is to complete the required quarterly review of the MDTA’s investment strategy and associated benchmarks for the period ended September 30, 2025. Investment returns and portfolio composition were discussed in greater detail during the recent Finance and Administration Committee meeting. The committee members support a continuation of the investment strategies for all accounts. KEY POINTS • No changes in strategy or benchmarks are recommended. • Investments conformed to Investment Policy limitations. • Portfolio structuring by account adhered to board approved strategy. o Strategy should remain consistent, despite short-term return volatility associated with the interest rate environment. o Management does not attempt to time market rate changes; Duration Targeted reserves maintain consistent structures. Passive approach to duration, Active in relative-value security selection. • Chosen strategies and benchmark indices represent a reasonable and prudent compromise between long-term, multiyear return/income focus and tolerance for return volatility. o The longer duration strategies employed in certain reserves generate higher return volatility with expected higher average annual returns over multiyear periods. INVESTMENT STRATEGY The Trust Agreement and Investment Policy prescribe a Matched Funding investment strategy for specific purpose accounts including Operating, Debt Service, and Capital/Construction. Longer term strategies are permitted by the Trust Agreement for certain reserves that do not have cash flow needs. The Investment Policy’s investment objectives include longer-term total return considerations for reserves. Given that the unencumbered cash balance will be held long-term, a long-term approach is prudent and supported by the Finance and Administration Committee.
2310 Broening Highway • Baltimore, MD 21224 • mdta@mdta.maryland.gov • 410.537.1000 • 711 (MD Relay) • mdta.maryland.gov • ezpassmd.com
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