Item 6 - Proposed Changes to Investment PolicyDiscussion on Proposed Changes to the Investment Policy
Staff recommends the following changes for FY 20-21:
1. Revise the 1 year or less investment maturity category at time of purchase from
at least 15% and no more than 50% to at least 15% of the portfolio. This will
provide liquidity to meet cash flow needs.
Section 3.3 Mitigating Risk in the Portfolio (b)(2):
Portfolio maturities shall be managed to avoid undue concentration at time of
purchase in any specific maturity sector with at least 15% of the portfolio must
be invested from one to 365 days and no more than 50% in this maturity sector,
no more than 50% of the portfolio be invested from 366 days to 730 days, no
more than 35% of the portfolio be invested from 731 days to 1095 days, no more
than 30% of the portfolio be invested from 1096 days to 1460 days, and no more
than 30% of the portfolio be invested from 1461 days to 1825 days.
2. Take out the LAIF % limit to allow flexibility to invest in this vehicle based on
market conditions.
Section 3.1 Investments Authorized (4):
State of California Local Agency Investment Fund (LAIF) is permitted, with the
knowledge that the fund may invest in some vehicles allowed by statute but not
otherwise authorized by the City Council in this SIP. The Treasurer shall obtain
from the State Treasurer, no less than quarterly, reports providing sufficient
detail to adequately judge the risk inherent in the LAIF portfolio, and shall inform
the City Council immediately of any risks noted that may warrant reconsideration
of this investment vehicle. (Limits: Maximum concentration 35% of total portfolio
for all accounts. This maximum limit is increased to 40% of total portfolio when
there is an influx of large deposits resulting from called bonds. The 40% limit is
allowed for the next 30 days after the bonds are called so that the City can
purchase other investments to bring the allowable percentage back to the 35%.)