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Informational report regarding update on the City of South San Francisco’s investment portfolio as of September 30, 2024 (Frank Risso, Treasurer, Karen Chang, Director of Finance, Carlos Oblites, Chandler Asset Management)
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RECOMMENDATION
Recommendation
Staff recommends that the City Council receive an information report on the investment portfolio for the quarter ended September 30, 2024.
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BACKGROUND/DISCUSSION
California Government Code Section 53600 et seq., strictly governs the investment activities related to public funds. Code provides guidance and restrictions related to permitted investment sectors, concentration limits, minimum credit quality, and maximum maturities permitted. Public agencies may only invest in fixed income securities. The purchase of stock is prohibited. Therefore, the City primarily invests in highly rated debt securities, such as U.S. Treasury obligations, federal agency, and government-sponsored enterprise debt, as well as obligations issued by high credit quality, and non-governmental entities such as corporations, issuers of passthrough securities, and supranational issuers.
California Government Code also specifies that the investment objectives of public agency investment programs shall be safety, liquidity, and return, in that order. As such, the safety of principal is the foremost objective of the City’s investment program. The investment program must remain sufficiently liquid to enable the City to meet all cash requirements. The City collaborates with its registered investment advisor, Chandler Asset Management, in managing the City’s funds. The City’s investment program totals nearly $335 million, of which Chandler Asset Management (Chandler) currently manages $280 million. The Chandler-managed portion is comprised of the City’s Mid-Term Portfolio targeting a duration of 2.76 years ($207,645,629), Limited Maturity Portfolio which is structured to achieve competitive yields for a portion of the City’s most liquid funds ($66,705,773), and a smaller Pension Reserve Portfolio ($6,052,977). The remainder comprises cash and investments held in the Local Agency Investment Fund (LAIF), the State Treasurer’s investment pool for California local governments.
The City’s investment program remained safe and liquid during the past year. The portfolio’s large allocation to US Treasury and Agency securities continues to provide a buffer to other markets with their strong liquidity characteristics. Chandler will continue to evaluate and monitor all portfolio holdings.
FISCAL IMPACT
There is no fiscal impact in receiving this informational report.
RELATIONSHIP TO STRATEGIC PLAN
The investment portfolio is consistent with the City’s Priority Area 3, Financial Stability.
CONCLUSION
The Investment portfolio is in compliance with the California Government Code and the City’s Investment Policy.
The City has sufficient cash and investments to meet its obligations over the next six months.
Attachments:
Attachment 1 - Investment Report for period ending September 30, 2024