Title
Staff Report for a City of San Leandro City Council Resolution Approving the Investment Report for the Quarter Ended December 31, 2019
Staffreport
SUMMARY AND RECOMMENDATIONS
Staff recommends the City Council review and accept the investment report for the quarter ended December 31, 2019.
BACKGROUND
The purpose of the City Council Investment Report is to inform the City Council of the City’s investment portfolio status as of the end of the quarter, December 31, 2019. The City’s Investment Policy Statement requires this quarterly report on the types of investments, amounts invested with approved institutions, and purchase and maturity dates and interest yields.
DISCUSSION
As of December 31, 2019, the City’s investment portfolio had a market value of $157 million, $8 million greater than on December 31, 2018. Of the total market value, $48 million was placed with the Local Agency Investment Fund (LAIF) and bank accounts and $109 million was placed in the Chandler Asset Management portfolio.
The rate of return for LAIF at the end of the quarter was 2.29%, while the average book yield for the Chandler managed funds was 2.39%. The LAIF return was 0.11% greater on December 31, 2018, while the Chandler return was 0.10% lower. LAIF’s investment report reflects a snapshot in time (referred to as quarterly apportionment rate) while Chandler’s reflects the performance of the portfolio over the entire quarter.
The City’s investment policy establishes three criteria for the performance standard-the LAIF rate of return and the rates for both 2-year and 5-year U.S. Treasury securities. Amounts invested in LAIF met this performance standard. The Chandler managed funds average book yield was 2.39%, above the benchmark rates of return on the 2-year U.S. Treasury Bill of 1.89%, and the 5-year U.S. Treasury Note of 2.20%.
Amounts invested with LAIF are essentially liquid; funds can be withdrawn with minimal notice as City operations require. The rate of return earned by LAIF generally follows fixed income security rates.
Chandler Asset Management manages the balance of the portfolio with a market value of $109,000,000, 70% of the total portfolio. These investments range from one to almost five years to maturity, with the average maturity at 1.87 years (unchanged from December 31, 2018).
The report notes that the City is in compliance with all provisions of the City’s Investment Policy and the City is able to meet its cash obligations during the next six-months. Chandler’s strategy is to gradually lengthen the average maturity of the portfolio in order to gain higher interest rates.
PREPARED BY
Elizabeth D. Warmerdam, Interim Finance Director