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City of San Leandro <br />Meeting Date: December 2, 2019 <br />Staff Report <br />Agenda Section:File Number:19-622 CONSENT CALENDAR <br />Agenda Number:8.F. <br />TO:City Council <br />FROM:Jeff Kay <br />City Manager <br />BY:David Baum <br />Finance Director <br />FINANCE REVIEW:David Baum <br />Finance Director <br />TITLE:Staff Report for a City of San Leandro City Council Resolution to Approve the <br />Investment Report for the Quarter Ended September 30, 2019 <br />SUMMARY AND RECOMMENDATIONS <br />Staff recommends that the City Council review and accept the investment report for the quarter <br />ended September 30, 2019. <br />OVERVIEW <br />On September 30, 2019, the City’s investment portfolio had a market value of $150.2 million. Of <br />the total $150.2 million, $41.6 million was placed with the Local Agency Investment Fund (LAIF) <br />and bank accounts and $108.6 million was placed in the Chandler Asset Management portfolio. <br />The rate of return for LAIF for the quarter was 2.45%, while the average book yield for the <br />Chandler managed funds was 2.40%. The City’s investment policy establishes three criteria 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 2.40%, which is above the benchmark rate of return on <br />the 2-year U.S. Treasury securities of 1.63%, and the 5-year U.S. Treasury securities of 1.55%. <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Amounts invested with LAIF are essentially liquid; funds can be withdrawn with minimal notice as 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 over 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 />with this approach, and carefully monitors maturity dates to ensure that both short and long-term <br />Page 1 City of San Leandro Printed on 11/27/2019 <br />69