HomeMy WebLinkAboutItem 4.5 Treasurer's Investment ReportOF
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DATE:
TO:
FROM:
SUBJECT
STAFF REPORT
CITY COUNCIL
May 17, 2016
Honorable Mayor and City Councilmembers
CITY CLERK
File #320 -30
Christopher L. Foss, City Manager (/'/�
City Treasurer's Informational Report of Investments for the Quarter Ending
March 31, 2016
Prepared by Jay Baksa, Financial Analyst
EXECUTIVE SUMMARY:
The City of Dublin's Investment Policy calls for a semi - annual report of investments. This report
is for the quarter ending March 31, 2016, and includes a monthly transaction ledger. The City's
investment portfolio for this period totaled $ 200,263,307 (book value) with an average market
yield of 0.86 %. All investment transactions continue to comply with the City's Investment Policy
and the California Government Code. As required by the Policy, the City Treasurer
(Administrative Services Director) affirms that the City is able to meet its expenditure
requirements for the next six months.
FINANCIAL IMPACT:
Investments are made in accordance with the City Investment Policy and State Law. Interest
earned is apportioned between funds (i.e. General Fund, Gas Tax Fund, etc.) based upon their
proportionate share of the total cash balance. Based on the financial needs of the City including
the timing of receipt of revenues and payment of expenditures, the quarterly cash balance can
vary from quarter to quarter. At this time, Staff is not anticipating interest earnings to vary
significantly from the FY 2015 -16 Budget.
RECOMMENDATION:
Staff recommends that the City Council receive the report.
Submitted By
Administrative Services Director
DESCRIPTION:
Reviewed By
Assistant City Manager
The total investment portfolio of $200,263,307 (book value) is comprised of $145,190,169
managed by Chandler Asset Management (Chandler), and $55,073,138 invested by the City in
local government pools. The average market yield of the Chandler portfolio and the local pools
Page 1 of 4 ITEM NO. 4.5
was 0.99% and 0.51% respectively. The total investment portfolio balance fluctuates throughout
the year due to normal cash flow needs and includes both discretionary and restricted funds.
Economic Update Highlights
The following are some highlights from the Economic Update included in the attached
Investment Report prepared by Chandler (Attachment 1):
• The Federal Open Market Committee left interest rates unchanged in March, expressing
concern that economic and financial conditions abroad posed risks to the US economy
and labor market. Experts believe the doors remains open for a 25- basis -point increase
in June, with an additional 25- basis -point hike at the end of the year.
• The March employment report was stronger than expected with the unemployment rate
at 5.0 %, pointing to ongoing strength in the labor market. Additionally consumer
confidence remains strong and housing trends remain healthy. Home prices are up 5.7%
year- over -year. Fourth quarter 2015 GDP grew at a stronger- than - expected pace of 1.4%
and market participants are now forecasting GDP growth of 1.2% for the first quarter of
2016.
• In March, the Treasury yield curve steepened slightly, with the 2 -year Treasury yield
down five basis points and the 10 -year Treasury yield up three basis points. Ongoing
uncertainty about monetary policy and how the Fed communicates its economic
projections will likely continue to fuel financial market volatility.
City of Dublin Portfolio
The City's portfolio managed by Chandler has maintained a healthy balance of investment
types. As illustrated in Chart 1 below, the City's holding as managed by Chandler, remained
consistent with the prior quarter with only minor shifts from Money Market Funds to Asset
Backed Securities, which offer a higher interest yield.
Chart 1: Investments by Type, December 31, 2015 — March 31, 2016
March 31, 2016
LAI F
24.6%
City of Dublin Consolidated
LAIF
23.3%
December 31, 2015
Commercial'
Commercial'
Paper
Papa,
7.4 4b
us
1-4%
us
Corporale
Corporetl
13.9%
13.7%
Money
Money
Market
Market
Fund
Fund
FI
FI
us
Treasury
us
Treasury
21.8%
21.8%
ABS
ASS
4.5 %
3_3%
Local
Local
Gov
Gov
Agency
Investment
Agency
Investment
30.8%
PON
2-7%
31.0 ':i
Pool
4_5%
Page 2 of 4
The market value of the City's portfolio increased $1.6 million since December 2015 (see Table
1 below), and $16.6 million over the same quarter the prior year, due to increased Property Tax,
Sales Tax and Development revenue.
Table 1: Portfolio Values and Yield to Maturity
March 31. 2015 December 31, 2015 March 31, 2015
Par Book %of 96 of Total Book Market Weighted
Holdings Market Value Market Value Value Value Market Value Sub-total Portfolio Yield Yield Yield
Managed by City
LAIF 45,985,438 46,650,402 49,694,031 49,694,031 49,694,031 90.23% 25% 0.51% 0.51%
CAMP 15,594,002 9,071,383 5,379,107 5,379,107 5,379,107 9.8% 3% 0.46% 0.46%
SUBTOTAL 61,579,439 55,721,784 55,073,138 55,073,138 55,073,138 100.00% 27.49% 0.51% 0.51%
Managed by Chandler
0.95%
1.08%
30.8%
1.02%
0.85%
1.5%
ABS
6.127.215
6.556.235
9.084.OSS
9.082.931
9.078.767
6.2%
Agency
49,657,362
62,090,928
61,795,000
61,802,268
62,133,587
42.4%
Commercial Paper
4,242,454
2,708,385
2,930,000
2,925,214
2,925,214
2.0%
Money Market
12,460,940
2,552,738
665,899
655,899
665,899
0.5%
US Corporates
19,430,149
27,292,579
27,465,000
27,519,033
27,956,869
19.0%
US Treasury
31,673,594
43,094,431
43,350,000
43,194,823
43,848,669
29.9%
SUBTOTAL
123,591,714
144,315,296
145,289,987
145,190,169
146,509,006
100.0095
Accrued Interest
266,891
441,240
197 ,989,015
200,555,801
474,224
YIELaTOMATURITY
123,858,605
144,756,536
17696
1.08%1
146,983,230
TOTALPORTFOLIO 185,438,044 200,478,320 200,363,125 200,263,307 202,056,368
Change from Dec 31, 2015 1,573,043
Chance from Mar 31, 2015 16.613,324
4.5%
0.95%
1.08%
30.8%
1.02%
0.85%
1.5%
0.71%
0.71%
0.3%
0.00%
0.00%
13.7%
1.76%
1.35%
21.6%
1.14%
0.98%
72.51%
1.19%
0.99%
100.00% 0.8695
0.13%
0.01%
0.14%
0.05%
0.26%
0.01%
0.00%
0.19%
0.21%
0.72%
Overall market yield -to- maturity (YTM) decreased from 1.08% to 0.86% (see Table 2 below).
For detailed monthly transactions, see Attachment 2.
Table 2: Quarterly Holdings (Par Value) by Type, and YTM, 5 Quarters
Holdings (Par Value)
3/31/15
5/30/15
9/30/15
12131115
3/31/16
YTM
LAIF /CAMP
61,579,439
65,662,379
63,565,417
55,721,784
55,073,138
0.51%
ABS
6,122,764
7,517,364
6,942,267
6,586,279
9,084,088
1.08%
Agency
49,575,DD0
58,325,000
57,325,00D
62,325,000
61,795,000
0.85%
Commercial Paper
4,245,DD4
2,685,444
2,685,DDD
2,710,000
2,930,000
0.71%
Money Market
12,460,940
2,289,4D2
1,771,332
2,562,738
665,899
0.00%
US Corporates
19,244,444
26,85D,DDD
26,850,DDD
27,300,000
27,465,D44
1.35%
US Treasury
31,5D4,DD4
36,25D,4DD
38,750,DDD
43,350,004
43,350,D44
0.98%
TOTAL
184,683,143
194,579,145
197 ,989,015
200,555,801
200,353,125
YIELaTOMATURITY
0.60%
4.7895
17696
1.08%1
4.86%
Funds Managed by the City
The City participates in two local agency investment pools managed by government
finance professionals and treasurers: the Local Agency Investment Fund (LAIF) and the
California Asset Management Program (CAMP). The City has typically carried close to the
$50 million maximum allowable in LAIF with any excesses resulting from the timing of large
payments deposited into CAMP as a temporary holding place.
Page 3 of 4
LAIF's most current report shows an increase in the quarterly yield, to the level last experienced
in FY 2010 -11.
Table 3: Quarterly LAW Yields, Recent Six Years - 1 Quarter
NOTICING REQUIREMENTS /PUBLIC OUTREACH:
I0 •[Tits
ATTACHMENTS: 1. Investment Report prepared by Chandler.
2. Monthly Transactions (January 2016 —March 2016)
Page 4 of 4
March
June
Sept
Dec
2010
0.56
0.56
0.51
0.46
2011
0.51
0.48
0.38
0.38
2012
0.38
0.36
0.35
0.32
2013
0.28
0.24
0.26
0.26
2014
0.23
0.22
0.24
0.25
2015
0.26
0.28
0.32
0.37
20'16
0.46
NOTICING REQUIREMENTS /PUBLIC OUTREACH:
I0 •[Tits
ATTACHMENTS: 1. Investment Report prepared by Chandler.
2. Monthly Transactions (January 2016 —March 2016)
Page 4 of 4