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City of San Leandro <br />Meeting Date: February 20, 2018 <br />Staff Report <br />Agenda Section:File Number:18-074 CONSENT CALENDAR <br />Agenda Number:8.I. <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 to Approve the Investment Report for the Quarter <br />Ended December 31, 2017 <br />SUMMARY AND RECOMMENDATIONS <br />Staff recommends that the City Council review and accept the investment report for the quarter <br />ended December 31, 2017. <br />OVERVIEW <br />At December 31, 2017, the City’s investment portfolio had a market value of $118.9 million. Of <br />the total $118.9 million, $63.8 million was placed with the Local Agency Investment Fund (LAIF) <br />and bank accounts and $55.1 million was placed in the Chandler Asset Management portfolio. <br />The rate of return for LAIF for the quarter was 1.20%, while the average book yield for the <br />Chandler managed funds was 1.53%. The City’s investment policy establishes three bases for <br />the 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 Chandler <br />managed funds average book yield was 1.53%, which is below the benchmark rate of return on <br />the 2-year U.S. Treasury securities of 1.89%, and the 5-year U.S. Treasury securities of 2.20%. <br />Amounts invested with LAIF are essentially liquid; funds can be withdrawn with minimal notice as <br />City operations require. The rate of return earned by LAIF generally follows fixed income security <br />rates. <br />The balance of the City’s portfolio is with Chandler Asset Management. These investments range <br />from one to four years in maturity. The report notes that the City is in compliance with all <br />provisions of the City’s Investment Policy, and the City is able to meet its cash obligations during <br />the next six-month period. The basic strategy recommended by Chandler is to gradually lengthen <br />the average maturity of the portfolio in order to gain higher interest rates. Staff is in agreement <br />Page 1 City of San Leandro Printed on 2/13/2018 <br />1148