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CITY OF SAN LEANDRO <br />MEMORANDUM <br />DATE: June 1, 2012 <br />TO: Finance Committee <br />FROM: Chris Zapata, City Manager <br />BY: David Baum, Finance Director <br />Mary Ann Perini, Budget and Compliance Manager <br />SUBJECT: Investment Report, Quarter Ended March 31, 2012 <br />RECOMMENDATION <br />Staff recommends that the Finance Committee review and accept the attached <br />investment report for the quarter ended March 31, 2012. <br />OVERVIEW <br />At March 31, 2012, the City's investment portfolio had a market value of $76 million. Of <br />the total $76 million, $48.2 million was placed with the Local Agency Investment Fund <br />(LAIF) and bank accounts and $28.3 million was placed in the Chandler Asset <br />Management portfolio. On January 31, 2012 the Redevelopment Agency LAIF <br />accounts were closed as a result of the dissolution of the San Leandro Redevelopment <br />Agency. These funds were transferred to the City's Economic Development Agency <br />LAIF account in the amount of $9,346,000. <br />The rate of return for LAIF for the quarter was 0.38 %, while the average book yield for <br />the Chandler managed funds was 1.37 %. The City's investment policy establishes <br />three bases for the performance standard: the LAIF rate of return and the rate of return <br />on 2 -year and 5 -year U.S. Treasury securities. Amounts invested in LAIF meet this <br />performance standard. The Chandler managed funds average book yield was 1.37 %, <br />which exceeded both the benchmark rate of return on the 2 -year U.S. Treasury <br />securities of 0.33% and the 5 -year U.S. Treasury security benchmark of 1.04 %. <br />Amounts invested with LAIF are essentially liquid and funds can be withdrawn with <br />minimal notice as City operations require. The rate of return earned by LAIF generally <br />follows fixed income security rates. For example, a year ago the LAIF rate was 0.50% <br />and it was 0.38% as of December 31, 2011. <br />The balance of the City's portfolio is with Chandler Asset Management. These <br />investments range from one to four years in maturity. The attached report notes that <br />the City is in compliance with all provisions of the City's Investment Policy. The basic <br />strategy recommended by Chandler is to gradually lengthen the average maturity of the <br />