Finance Highlights 2007 0925 - Laserfiche WebLink

Home

CITY OF SAN LEANDRO MEMORANDUM DATE: September 10, 2007 TO: Finance Committee FROM: Jesse Ba]oca, Finance Directo~~ SUBJECT: Investment Report -Quarter Ended June 30, 2007 RECOMMENDATION Staff recommends Finance Committee acceptance of the attached investment report for the quarter ended June 30, 2007. OVER~~IEW On June 30, 2007 the City's cash & investment portfolio had a market vahae of $102.9 million, an increase of X19 million from March 3l, 2007. The increase primarily reflects the timing of major 4`~' quarter revenues (e.g. property taa, triple-flip, annual franchise). During this period, the City's investments in LA]F increased from $39 million to X452 million, which provided for a greater retuni on investment. The LAIF quarterly apportionment rate as of June 30, 2007 was 5.23%, an increase from 5.17% on March 31, 2007. For the same period, the investment portfolio managed by Chandler had a June 30, 2007 average book yield of 4.48%, an increase from 4.22°%. In summary, the investment in LAIF continues to exceed the City's performance with Chandler. The average maturity of the Chandler portfolio for the March 31, 2007 remains under 2 years and is performance measured against 1-3 year govenunent securities benchmark. Although the yield curve appears to be correcting itself, as of September 10, 2007 an inversion continues to exist where the 6-month Treasury of 4.20% is still higher than the 2-year Treasury of 3.87%. As a result of the current enviroiunent, the City will continue with its current barbell strategy of purchasing short-term investments (under 1-year) in an effort to maintain liquidity and gain a higher yield while optioning to also purchase long-term (up to 5 years) to ensure security with the portfolio and current interest rate environment. Anew LAIF account will soon be opened for the Economic Development Agency which will allow the City to achieve additional interest earnings while maintaining liquidity. Since inception (May 2004), Chandlers' performance gain to the City, less the fees paid for portfolio management services, remains less favorable. when compared to LAIF. The performance shortfall primarily reflects (2004) purchase of long-term investment securities under the previous 1 to 5 year performance benchmark, when interest rates were low but rising. In addition to opening another LAIF account, the City is pursuing additional brokers for investment security purchases with the intent of increasing yield opportunities and lower cost. E: Unvesm~ents\Inv eshnentReport6-30-07. d oc