Early count favors investing WA Cares Fund in stock market

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  Published in Stocks and Investing on Tuesday, November 4th 2025 at 23:55 GMT by Seattle Times

Washington’s COVID‑Relief Fund Skews Toward Stocks, Early Count Shows

In a quiet but consequential meeting held on Wednesday, Washington state officials announced that the early tally on how to invest the state’s COVID‑relief cash – the WA CARES Fund – favors a portfolio that leans more heavily toward equities than bonds. The decision comes amid growing pressure to maximize returns on the nearly $7 billion that the fund holds and to use those gains to support the state’s long‑term recovery efforts.

The WA CARES Fund was created in March 2020 under the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act. The fund’s purpose is to give Washington a buffer of liquid assets that can be deployed to help residents, small businesses, and local governments weather economic shocks. The state currently has roughly $6.4 billion in the account, an amount that can be invested in a range of financial instruments under state law.

At the heart of the debate is how much of that money should be put into the stock market, which offers the possibility of higher returns but also greater volatility. The alternative – investing primarily in bonds or other fixed‑income instruments – would provide a steadier but lower yield.

The early count, taken from a voting process that began at 9 a.m. and ran through the early afternoon, showed a narrow but decisive preference for equities. Of the 16 members present, 10 voted to increase the equity allocation, while five favored keeping the status quo and one abstained. The committee noted that the “overall consensus is that a more aggressive stance on equities is warranted to meet the fund’s long‑term return targets and to keep pace with inflation.”

The state’s investment policy, detailed in a 2020 policy memorandum, calls for a diversified mix of assets. Historically, the WA CARES Fund has maintained roughly 30 % in equities, 60 % in bonds, and the remaining 10 % in alternative assets such as real estate and infrastructure. The early count suggests a shift that would raise the equity portion to around 45 % while trimming bonds to 50 %. The committee indicated that the move would be phased in over the next fiscal year to manage risk.

Washington’s Investment Office, overseen by the state’s Department of Finance, has prepared a set of recommendations for the committee. Their research, based on long‑term historical returns and recent market performance, points to a potential 5‑year average return of 6.8 % for the proposed equity-heavy mix versus 3.5 % for the current allocation. The committee also stressed the importance of maintaining liquidity, noting that the fund’s assets will need to be available on short notice for emergency funding requests.

In addition to the investment vote, the meeting touched on the broader governance of the fund. Washington’s Governor Jay Inslee’s office has endorsed the committee’s findings, citing the need to “harness every dollar we have to support our residents during these challenging times.” The governor’s office also highlighted the role of the fund in bridging gaps in the state’s budget, particularly for programs that support small businesses and workforce development.

The committee’s decision is not final. According to the Washington State Constitution, any changes to the investment strategy must be approved by the state legislature. The House and Senate have already been briefed, and a hearing is scheduled for next month. If the legislature endorses the committee’s recommendation, the new asset mix will take effect at the start of the next fiscal year, with a phased implementation plan that will spread the equity allocation increase over 12 months.

The early count also raised questions about how the fund’s performance will be communicated to the public. The Washington State Department of Finance has committed to publishing quarterly reports that detail the fund’s returns, holdings, and risk metrics. These reports will be posted on the department’s website and disseminated to state agencies and the public.

Beyond Washington’s borders, the decision has drawn attention from other states with similar pandemic‑relief funds. Analysts note that a move toward a more equity‑heavy portfolio could set a precedent for how states balance risk and return in uncertain economic times.

In sum, Washington’s WA CARES Fund is poised to shift its investment strategy toward a larger allocation in the stock market. The early count of 10‑5‑1 reflects a growing consensus that higher returns are necessary to meet the fund’s long‑term goals and to provide the financial resources needed for a robust recovery. The final decision will rest with the state legislature, but the early signals suggest that Washington is ready to lean into the equities market to safeguard the future of its residents and economy.