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File Number: <br />TO: <br />FROM: <br />BY: <br />14-478 <br />City Council <br />Chris Zapata <br />City Manager <br />David Baum <br />City of San Leandro <br />Meeting Date: November 17, 2014 <br />Finance Director <br />FINANCE REVIEW: David Baum <br />Finance Director <br />Staff Report <br />Agenda Section: CONSENT CALENDAR <br />Agenda Number: 8.E. <br />TITLE: Staff Report for Resolution Approving the Investment Report for the Quarter <br />Ended September 30, 2014 <br />SUMMARY AND RECOMMENDATIONS <br />Staff recommends that the City Council review and accept the investment report for the <br />quarter ended September 30, 2014. <br />OVERVIEW <br />At September 30, 2014, the City's investment portfolio had a market value of $75.6 million. Of <br />this total, $36.7 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 (Chandler) <br />portfolio. In the third quarter of 2014, $1.6 million of maturing securities were reinvested in <br />Treasury and Agency securities scheduled to mature between September 2017 and January <br />2018. <br />The rate of return for LAIF for the quarter was 0.24%, while the average yield for the Chandler <br />managed funds was 0.86°/x. The City's investment policy establishes three bases for the <br />performance standard: the LAIF rate of return and the rate of return on 2 -year and 5 -year U.S. <br />Treasury securities. Amounts invested in LAIF meet this performance standard. The <br />Chandler managed funds average yield was 0.86°/x, which exceeds the benchmark rate of <br />return on the 2 -year U.S. Treasury securities of 0.57%. <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Amounts invested with LAIF are essentially liquid; funds can be withdrawn with minimal notice 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 Chandler portfolio investments range from one to four years in maturity. The report notes <br />that 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 />portfolio in order to gain higher interest rates. Staff is in agreement with this approach, and <br />City of San Leandro Page 1 Printed on 11113/2014 <br />