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HomeMy WebLinkAboutItem 4.6 Treasurer's Info ReportOF Ill 4 �Ir 111 0 � =�, 82 DATE: TO: FROM: SUBJECT STAFF REPORT CITY COUNCIL May 20, 2014 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, 2014 Prepared by Colleen Tribby, Director of Administrative Services EXECUTIVE SUMMARY: The City Council will receive its Quarterly Investment Report for the quarter ending March 31, 2014, which includes a monthly transaction ledger. The City's investment portfolio for this period totaled $147,881,826 (book value) with an average book yield of 0.58 %. 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 the Funds (i.e. General Fund, Gas Tax Fund, etc.) based upon the proportionate share of the total cash balance. The current market yield is slightly higher than last quarter, but Staff is not recommending any budget changes at this point. RECOMMENDATION: Staff recommends that the City Council receive the report. J 1� Submitted By Reviewed By Administrative Services Director Assistant City Manager DESCRIPTION: This report is the second investment performance account provided to the City Council since the City began a contract with Chandler Asset Management (Chandler) for ongoing investment management services. The total investment portfolio of $147,881,826 (book value) is comprised of $108,493,357 managed by Chandler, and $39,388,468 invested by the City in Page 1 of 4 ITEM NO. 4.6 local government pools. The average book yield of the Chandler portfolio and the local pools was 0.71% and 0.23 %, respectively. The portfolio includes both discretionary and restricted funds and the balance will fluctuate throughout the year due to normal cash flow. Quarterly Economic Update Highlights The following are highlights from the Economic Update included in the attached Investment Report prepared by Chandler (Attachment 1). The highlights are a general snapshot of market conditions over the quarter ending March 31, 2014. • The overall labor market seems to be slowly improving, though the unemployment rate was unchanged at 6.7 %. Payroll growth is slower than the previous quarter, possibly due to severe winter weather carrying into March. • The Federal Open Market Committee (FOMC) left its policy rate unchanged at its March 18 -19, 2014 meeting, and announced another $10 billion reduction in asset purchases beginning in April (FOMC's policy of buying assets, also called Quantitative Easing, has been used to stimulate the economy since November 2008). The FOMC will also continue targeting a long -run inflation goal of 2 %. • FOMC Chairwoman Yellen suggested that the first fed funds rate hike could happen in the spring of 2015, six months after the reduction in asset purchasing is complete. • Over the quarter, the yield curve flattened, and is changing as investors anticipate the future fed funds rate hike. City of Dublin Portfolio Since the City's engagement of Chandler to manage funds invested outside of the local pools, and the revision of the City's investment policy to allow for new investment opportunities, the City's portfolio has maintained a healthy balance of investment types. As illustrated in Chart 1 below, the City has slightly decreased its holdings in the local pools (LAIF and CAMP) and has increased its corporate holdings. Page 2 of 4 Mon Market Commc Paper 3 Chart 1: Investments by Type, Dec 31, 2013 - March 31, 2014 INVESTMENTS BY TYPE December 31, 2013 us Corporates INVESTMENTS BYTYPE March 31, 2014 us Corporates US Treasury, 9.12% 16.59% Money Market, 2.04% Commercial Paper, 4.00% LAIF/CAM 26.6796 ABS, 3.6795 Agency, 37.92% The market value of the City's portfolio has decreased $2.6 million since December 2013, due to routine in -flows and out -flows of funds invested in the local short -term investment pools (see Table 1 below). Since the same quarter one year ago, the portfolio increased $9.6 million, due primarily to increases in large revenue categories, including Property Tax, Sales Tax, and Building Permits. March 31 2013 Market Holdings Value Managed by Cit LAIF 49,717,329 CAMP 10,760,375 Agency 77,531,230 Money Market 123,125 SUBTOTAL 138,132,058 Managed by Chandler ABS Agency Commercial Paper Money Market US Corporates US Treasury SUBTOTAL - Accrued Interest 273,478 273,478 Table 1: Portfolio Values and Yield to Maturity Dec 31 March 31, 2014 2013 Market Par Book Market % of % of Total Book Market Value Value Value Value Subtotal Portfolio Yield Yield 47,500,000 39,388,000 39,388,000 39,388,000 100.0% 4,641,245 468 468 468 0.0% 52,141, 245 1 39, 388,468 39, 388,468 39, 388, 468 1 100.0% 3,701,443 5,420,000 55, 896, 362 56, 000, 000 5,894,649 5,905,000 4,547,383 3,008,529 9,637,436 13, 475, 000 18,498,926 24,500,000 98,176,199 108,308,529 193,626 98,369,825 5,421,813 5,425,421 5.0% 56, 036, 356 55, 910, 622 51.6% 5,901,503 5,901,503 5.4% 3,008,529 3,008,529 2.8% 13, 631, 428 13, 618,131 12.6% 24, 493, 729 24, 492, 248 22.6% 108, 493, 357 108, 356, 453 100.0 239,933 108, 596, 386 'OTAL PORTFOLIO 138,405,536 150,511,070 147,696,997 147,881,826 147,984,855 Change from Dec 31, 2013 (2,526,215) Change from March 31, 2013 9,579,319 Page 3 of 4 27% 0.23% 0.23% 0% 0.06% 0.06% 27% 0.23% 0.23% 4% 0.50% 0.45% 38% 0.84% 0.65% 4% 0.23% 0.23% 2% 0.00% 9% 1.24% 1.23% 17% 0.35% 0.33% 73% 0.71% 0.60% 100% 0.5851G 0.50% Overall yield -to- maturity (YTM) has increased from 0.46% to 0.50% since last quarter, as corporate holdings increased $4.0 million, and those investments have the highest YTM in the portfolio (see Table 2). As interest rates rise over the long term, the City will continue to work with Chandler to balance the portfolio in accordance with the City's priorities of safety, liquidity, and yield. For detailed monthly transactions, see Attachments 2, 3, and 4. Table 2: Quarterly Holdings (Par Value) by Type, and YTM, 5 Quarters Holdings (Par Value LAIF /CAM P ABS Agency Commercial Paper Money Market US Corporates US Treasury 60, 477, 703 61, 703, 809 75, 954, 293 77, 000, 000 73, 000, 000 64, 000, 000 123,125 14,358,708 3,541 TOTAL 137,600,828 149,062,517 139,957,834 YIELD TO MATURITY 0.90% 0.60% 0.50% Funds Managed by the City 52,141, 245 3,700,000 56, 000, 000 5,900,000 4,547,383 9,475,000 18, 500, 000 150, 263, 628 0.46% 39,388,468 5,420,000 56, 000, 000 5,905,000 3,008,529 13,475,000 24, 500, 000 147,696,997 0.50% YTM 0.23% 0.45% 0.65% 0.23% 0.00% 1.23% 0.33% 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. However, with LAIF rates at a historic low (see Table 3), the City shifted $10 million during the quarter from LAIF to Chandler for investment other vehicles. The City will continue to participate in LAIF to provide for immediate liquidity, though will likely maintain the balance at or around $40 million. Table 3: Quarterly LAIF Yields, Recent Six Years NOTICING REQUIREMENTS /PUBLIC OUTREACH: None. ATTACHMENTS: 1. City of Dublin Investment Report for Quarter Ending March 31, 2014 2. Monthly Investment Transaction Report: January, February, and March 2014 Page 4 of 4 March June Sept Dec 2009 1.91 1.51 0.90 0.60 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 NOTICING REQUIREMENTS /PUBLIC OUTREACH: None. ATTACHMENTS: 1. 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