Finance Highlights 2006 0905 - Laserfiche WebLink

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CITY OF SAN LEANDRO MEMORANDUM DATE: August 29, 2006 TO: Finance Committee FROM: Jesse Baloca, Finance Direc~ SUBJECT: Investment Report -Quarter Ended June 30, 2006 RECOMMENDATION Staff recommends Finance Committee acceptance of the attached investment report for the quarter ended June 30, 2006. OVERVIEW On June 30, 2006 the City's investment portfolio had a market value of $73.2 million, which is a decrease of $2.2 million from March 31, 2006. Currently, the City's LAIF investments account for 40% of the City's total investments. The investment portfolio managed by Chandler had a June 30, 2006 average book yield of 3.83%, an increase from 3.53% on March 31, 2006. The average maturity of the Chandler portfolio for the June 30, 2006 remains under 2 years and is performance measured against 1-3 year government securities benchmark. As of August 23, 2006 the 2 to 5-year Treasury rate environment (of 4.87% to 4.77%) is lower than the 6-month and 1-year Treasury rates of 5.17% and 5.07%, respectively. As a result of the inverted yield and the Fed's current pause on an interest rate increase, the City will continue with its strategy to purchase 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. Since inception (May 2004), Chandlers' performance gain to the City, less the fees paid for portfolio management services, remains overall favorable as compared to LAIF. However, the June 30., 2006 LAIF' yield of 4.53% continues to exceed the City's portfolio with Chandler of 3.83% resulting in a loss when compared to Chandler. In response, the City will continue to evaluate upcoming maturities and its reinvestment into either LAIF, Chandler Asset Management, or with other .investment managers with the intent of increasing yield opportunities. E:~InvestmentsUnvestmentReport6-3 0-06. d oc