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City of San Leandro <br />Meeting Date: September 2, 2014 <br />Staff Report <br />Agenda Section:File Number:14-355 CONSENT CALENDAR <br />Agenda Number:8.D. <br />TO:City Council <br />FROM:Chris Zapata <br />City Manager <br />BY:David Baum <br />Finance Director <br />FINANCE REVIEW:David Baum <br />Finance Director <br />TITLE:Staff Report for Resolution Accepting the Investment Report for the Quarter <br />Ended June 30, 2014 <br />SUMMARY AND RECOMMENDATIONS <br />Staff recommends that the City Council review and accept the investment report for the <br />quarter ended June 30, 2014. <br />Overview <br />At June 30, 2014, the City’s investment portfolio had a market value of $90.9 million. Of this <br />total, $52.1 million was placed with the Local Agency Investment Fund (LAIF) and bank <br />accounts and $38.8 million was placed in the Chandler Asset Management portfolio. In the <br />second quarter of 2014, $1.8 million of maturing securities were reinvested in Treasury and <br />Agency securities scheduled to mature between April 2017 and August 2017. <br />The rate of return for LAIF for the quarter was 0.22%, while the average book yield for the <br />Chandler managed funds was 0.86%. The City’s investment policy establishes three bases <br />for the performance standard: the LAIF rate of return and the rate of return on 2-year and <br />5-year U.S. Treasury securities. Amounts invested in LAIF meet this performance standard. <br />The Chandler managed funds average book yield was 0.86%, which exceeds the benchmark <br />rate of return on the 2-year U.S. Treasury securities of 0.46%. <br />Amounts invested with LAIF are essentially liquid; funds can be withdrawn with minimal notice <br />as City operations require. The rate of return earned by LAIF generally follows fixed income <br />security rates. <br />The balance of the City’s portfolio is with Chandler Asset Management. These investments <br />range from one to four years in maturity. The report notes that the City is in compliance with <br />all provisions of the City’s Investment Policy. The basic strategy recommended by Chandler <br />is to gradually lengthen the average maturity of the portfolio in order to gain higher interest <br />Page 1 City of San Leandro Printed on 8/26/2014