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City of San Leandro <br />Meeting Date: November 7, 2016 <br />Staff Report <br />Agenda Section:File Number:16-584 CONSENT CALENDAR <br />Agenda Number:8.N. <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 Approving the Investment Report for the Quarter <br />Ended September 30, 2016 <br />SUMMARY AND RECOMMENDATIONS <br />Staff recommends that the City Council review and accept the investment report for the <br />quarter ended September 30, 2016. <br />OVERVIEW <br />At September 30, 2016, the City’s investment portfolio had a market value of $98.9 million. Of <br />the total $98.9 million, $54.1 million was placed with the Local Agency Investment Fund <br />(LAIF) and bank accounts and $44.8 million was placed in the Chandler Asset Management <br />portfolio. <br />The rate of return for LAIF for the quarter was 0.60%, while the average book yield for the <br />Chandler managed funds was 1.16%. 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 1.16%, which exceeds the benchmark <br />rate of return on the 2-year U.S. Treasury securities of 0.77%, and the 5-year U.S. Treasury <br />securities of 1.14%. <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Amounts invested with LAIF are essentially liquid; funds can be withdrawn with minimal notice 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, and the City is able to meet its cash obligations <br />during the next six-month period. The basic strategy recommended by Chandler is to <br />gradually lengthen the average maturity of the portfolio in order to gain higher interest rates. <br />Page 1 City of San Leandro Printed on 11/1/2016