HomeMy WebLinkAbout4.10 Consulting Services Agreement with Chandler Asset Management for Investment and Asset Management ServicesSTAFF REPORT
CITY COUNCIL
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Agenda Item 4.10
DATE:June 21, 2022
TO:Honorable Mayor and City Councilmembers
FROM:Linda Smith, City Manager
SUBJECT:Consulting Services Agreement with Chandler Asset Management for Investment and Asset Management ServicesPreparedby:Jay Baksa,Assistant Administrative Services Director
EXECUTIVE SUMMARY:The City Council will consider approving an agreement with Chandler Asset Management for Investment and Asset Management Services.
STAFF RECOMMENDATION:Adopt the Resolution Approving a Consulting Services Agreement Between the City of Dublin and Chandler Asset Management.
FINANCIAL IMPACT:The cost of the contract, which is tiered according to the total value of assets that would be under Chandler’s direct management, is estimated at $147,000 per year. The additional interest earnings are projected to cover this cost on an on-going basis.
DESCRIPTION:The City of Dublin’s investment portfolio is currently $370 million and is comprised of $130 million managed by the City,investing funds in two locally pooled money accounts and $240million managed by an Asset Manager, currently Chandler Asset Management (Chandler). In order to continue to maximize interest earnings while maintaining an appropriate level of risk and diversity, Staff believes it is beneficial to continue to utilize an asset manager. In April of 2022, the City released a Request for Proposal (RFP) for investment advisory services. The City received five proposals, which were reviewed by the Administrative Services staff and ranked according to the criteria outlined in the RFP, including credentials, proposed approach, fee structure and the location of the firms offices. The City received proposals from the following firms:
Garcia Hamilton & Associates
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Meeder Investment Management
PFM Asset Management
Chandler Asset Management
Public Trust AdvisorsThe five proposals received were all from well qualified firms, but it was ultimately agreed that Chandler was the most appropriate fit for the City. City Staff has minimal investment experience, and requires a high level of involvement and input from their asset management team, at times needing information on short notice and after hours. Chandler is a smaller firm located in California, which allows, a very high level of customer service, with access to all members of the Chandler team, on short notice including Chandler’s Co-Chief Investment Officer. Having this high level of customer service and access, was ultimately what helped set Chandler apart. Chandler began providing investment services for the City in Fiscal Year 2013-14, and has consistently outperformed the locally pooled money accounts and the performance benchmark. The contract will allow the City to continue to utilize Chandler for an initial 3-year term andincludes an additional two one-year extensions. In addition to the higher rate of return on the funds managed by Chandler, the Chandler investment team meets with the City’s finance staff on a quarterly basis to provide an economic update and discuss the City’s portfolio positioning. The Chandler team also provides guidance on an on-going basis on issues that may affect the City’s portfolio or the City’s investment policy and is available on short notice.The estimated yearly fee for Chandler’s service is $147,000 per year, but can vary based on the total assets under Chandler’s direct management, which excludes any amounts the City has invested with the locally-managed pools. The following is the fee structure:
seven (7) basis points for the first $75 million;
six (6) basis points for the next $75 million;
five (5) basis points for assets in excess of $150 million.Staff will continue working with Chandler to follow the California Government Code and the City’s Investment Policy, which are beholden to the tenets of safety, liquidity, and return, in that order.
STRATEGIC PLAN INITIATIVE:None.
NOTICING REQUIREMENTS/PUBLIC OUTREACH:The City Council Agenda was posted
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ATTACHMENTS:1) Resolution Approving a Consulting Services Agreement between the City of Dublin and Chandler Asset Management2) Exhibit A to the Resolution - Consulting Services Agreement with Chandler Asset Management for Investment and Asset Management Services.3) Request for Proposals – Investment Advisory Services
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Attachment 1
Reso. No. XX-22, Item X.X, Adopted XX/XX/2022 Page 1 of 1
RESOLUTION NO. XX – 22
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
APPROVING A CONSULTING SERVICES AGREEMENT
BETWEEN THE CITY OF DUBLIN AND
CHANDLER ASSET MANAGEMENT
WHEREAS,the City desires to continue to engage a professional investment management
firm with the technical expertise to develop and implement a sophisticated investment strategy;
and
WHEREAS,the City went through a Request for Proposal to provide investment services
and received five responses; and
WHEREAS, City Staff evaluated the responses and determined that Chandler Asset
Management’s approach most closely aligned to the City’s needs; and
WHEREAS,Chandler Asset Management specializes in and has extensive experience in
public agency investing, including the past eight years with the City; and the City and the
Consultant now wish to enter into an Agreement for investment and asset management services;
and
WHEREAS,Chandler Asset Management has proposed a tiered fee schedule based on
the total asset valuation under Chandler Asset Management’s direct management; and
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin does
hereby approve the consulting services agreement with Chandler Asset Management, attached
hereto as Exhibit A.
BE IT FURTHER RESOLVED that the City Manager is authorized to execute the
Agreement and make any necessary, non-substantive changes to carry out the intent of this
Resolution.
PASSED, APPROVED AND ADOPTED this 21st day of June 2022, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
______________________________
Mayor
ATTEST:
_________________________________
City Clerk
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Consulting Services Agreement between City of Dublin and July 1, 2022
Chandler Asset Management for Investment and Asset Management Services Page 1 of 14
CONSULTING SERVICES AGREEMENT BETWEEN
THE CITY OF DUBLIN AND
CHANDLER ASSET MANAGEMENT
FOR
INVESTMENT AND ASSET MANAGEMENT SERVICES
THIS AGREEMENT for consulting services is made by and between the City of Dublin (“City”) and
Chandler Asset Management (“Consultant”) (together sometimes referred to as the “Parties”) as of July 1,
2022 (the “Effective Date”).
Section 1. SERVICES. Subject to the terms and conditions set forth in this Agreement, Consultant
shall provide to City the services described in the Scope of Work attached as Exhibit A at the time and
place and in the manner specified therein. In the event of a conflict in or inconsistency between the terms
of this Agreement and Exhibit A, the Agreement shall prevail.
1.1 Term of Services. The term of this Agreement shall begin on the Effective Date and shall
end on June 30, 2025, and Consultant shall complete the work described in Exhibit A on or
before that date, unless the term of the Agreement is otherwise terminated or extended, as
provided for in Section 8. The time provided to Consultant to complete the services
required by this Agreement shall not affect the City’s right to terminate the Agreement, as
referenced in Section 8. Notwithstanding the foregoing this Agreement may be extended
for two one-year extensions upon the written consent of the Consultant and the City
Manager, provided that: a) sufficient funds have been appropriated for such purchase, b)
the price charged by the Consultant for the provision of the serves described in Exhibit A
does not increase. None of the foregoing shall affect the City’s right to terminate the
Agreement as provided for in Section 8.
1.2 Standard of Performance. Consultant shall perform all services required pursuant to this
Agreement in the manner and according to the standards observed by a competent
practitioner of the profession in which Consultant is engaged.
1.3 Assignment of Personnel. Consultant shall assign only competent personnel to perform
services pursuant to this Agreement. In the event that City, in its sole discretion, at any
time during the term of this Agreement, desires the reassignment of any such persons,
Consultant shall, immediately upon receiving notice from City of such desire of City,
reassign such person or persons.
1.4 Time. Consultant shall devote such time to the performance of services pursuant to this
Agreement as may be reasonably necessary to meet the standard of performance
provided in Subsection 1.2 above and to satisfy Consultant’s obligations hereunder.
1.5 [Intentionally Deleted].
1.6 [Intentionally Deleted].
Attachment #2
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Consulting Services Agreement between City of Dublin and July 1, 2022
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Section 2. COMPENSATION. City hereby agrees to pay Consultant as specified in the proposal,
attached as Exhibit B, notwithstanding any contrary indications that may be contained in Consultant’s
proposal, for services to be performed under this Agreement. City shall pay Consultant for services
rendered pursuant to this Agreement at the time and in the manner set forth herein. The payments
specified below shall be the only payments from City to Consultant for services rendered pursuant to this
Agreement. Consultant shall submit all invoices to City in the manner specified herein. Except as
specifically authorized by City in writing, Consultant shall not bill City for duplicate services performed by
more than one person.
Consultant and City acknowledge and agree that compensation paid by City to Consultant under this
Agreement is based upon Consultant’s estimated costs of providing the services required hereunder,
including salaries and benefits of employees and subcontractors of Consultant. Consequently, the Parties
further agree that compensation hereunder is intended to include the costs of contributions to any
pensions and/or annuities to which Consultant and its employees, agents, and subcontractors may be
eligible. City therefore has no responsibility for such contributions beyond compensation required under
this Agreement.
2.1 Invoices. Consultant shall submit invoices, not more often than once a month during the
term of this Agreement, based on the cost for services performed prior to the invoice date.
No individual performing work under this Agreement shall bill more than 2,000 hours in a
fiscal year unless approved, in writing, by the City Manager or his/her designee. Invoices
shall contain the following information:
The beginning and ending dates of the billing period;
Consultant shall give separate notice to the City when the total number of hours
worked by Consultant and any individual employee, agent, or subcontractor of
Consultant reaches or exceeds 800 hours within a 12-month period under this
Agreement and any other agreement between Consultant and City. Such notice shall
include an estimate of the time necessary to complete work described in Exhibit A and
the estimate of time necessary to complete work under any other agreement between
Consultant and City, if applicable.
2.2 Monthly Payment. City shall make monthly payments, based on invoices received, for
services satisfactorily performed, and for authorized reimbursable costs incurred. City
shall have 30 days from the receipt of an invoice that complies with all of the requirements
above to pay Consultant.
2.3 [Intentionally Deleted].
2.4 Total Payment. City shall pay for the services to be rendered by Consultant pursuant to
this Agreement. City shall not pay any additional sum for any expense or cost whatsoever
incurred by Consultant in rendering services pursuant to this Agreement. City shall make
no payment for any extra, further, or additional service pursuant to this Agreement.
Attachment #2
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Consulting Services Agreement between City of Dublin and July 1, 2022
Chandler Asset Management for Investment and Asset Management Services Page 3 of 14
In no event shall Consultant submit any invoice for an amount in excess of the maximum
amount of compensation provided above either for a task or for the entire Agreement,
unless the Agreement is modified prior to the submission of such an invoice by a properly
executed change order or amendment.
2.5 [Intentionally Deleted].
2.6 [Intentionally Deleted].
2.7 Payment of Taxes. Consultant is solely responsible for the payment of employment taxes
incurred under this Agreement and any similar federal or state taxes.
2.8 Payment upon Termination. In the event that the City or Consultant terminates this
Agreement pursuant to Section 8, the City shall compensate the Consultant for all
outstanding costs and reimbursable expenses incurred for work satisfactorily completed as
of the date of written notice of termination. Consultant shall maintain adequate logs and
timesheets to verify costs incurred to that date.
2.9 Authorization to Perform Services. The Consultant is not authorized to perform any
services or incur any costs whatsoever under the terms of this Agreement until receipt of
authorization from the Contract Administrator.
Section 3. FACILITIES AND EQUIPMENT. Except as set forth herein, Consultant shall, at its sole
cost and expense, provide all facilities and equipment that may be necessary to perform the services
required by this Agreement. City shall make available to Consultant only the facilities and equipment listed
in this section, and only under the terms and conditions set forth herein.
City shall furnish physical facilities such as desks, filing cabinets, and conference space, as may be
reasonably necessary for Consultant’s use while consulting with City employees and reviewing records and
the information in possession of the City. The location, quantity, and time of furnishing those facilities shall
be in the sole discretion of City. In no event shall City be obligated to furnish any facility that may involve
incurring any direct expense, including but not limited to computer, long-distance telephone or other
communication charges, vehicles, and reproduction facilities.
Section 4. INSURANCE REQUIREMENTS. Before fully executing this Agreement, Consultant, at its
own cost and expense, unless otherwise specified below, shall procure the types and amounts of insurance
listed below against claims for injuries to persons or damages to property that may arise from or in
connection with the performance of the work hereunder by the Consultant and its agents, representatives,
employees, and subcontractors. Consistent with the following provisions, Consultant shall provide proof
satisfactory to City of such insurance that meets the requirements of this section and under forms of
insurance satisfactory in all respects, and that such insurance is in effect prior to beginning work.
Consultant shall maintain the insurance policies required by this section throughout the term of this
Agreement. The cost of such insurance shall be included in the Consultant's bid or proposal. Consultant
shall not allow any subcontractor to commence work on any subcontract until Consultant has obtained all
insurance required herein for the subcontractor(s) and provided evidence to City that such insurance is in
effect. VERIFICATION OF THE REQUIRED INSURANCE SHALL BE SUBMITTED AND MADE PART OF
Attachment #2
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Consulting Services Agreement between City of Dublin and July 1, 2022
Chandler Asset Management for Investment and Asset Management Services Page 4 of 14
THIS AGREEMENT PRIOR TO EXECUTION. Consultant shall maintain all required insurance listed
herein for the duration of this Agreement.
4.1 Workers’ Compensation.
4.1.1 General Requirements. Consultant shall, at its sole cost and expense, maintain
Statutory Workers’ Compensation Insurance and Employer’s Liability Insurance for
any and all persons employed directly or indirectly by Consultant. The Statutory
Workers’ Compensation Insurance and Employer’s Liability Insurance shall be
provided with limits of not less than $1,000,000 per accident. In the alternative,
Consultant may rely on a self-insurance program to meet these requirements, but
only if the program of self-insurance complies fully with the provisions of the
California Labor Code. Determination of whether a self-insurance program meets
the standards of the California Labor Code shall be solely in the discretion of the
Contract Administrator.
The Workers’ Compensation policy shall be endorsed with a waiver of subrogation
in favor of the entity for all work performed by the Consultant, its employees,
agents, and subcontractors.
4.1.2 Submittal Requirements. To comply with Subsection 4.1, Consultant shall
submit the following:
a. Certificate of Liability Insurance in the amounts specified in the section;
and
b. Waiver of Subrogation Endorsement as required by the section.
4.2 Commercial General and Automobile Liability Insurance.
4.2.1 General Requirements. Consultant, at its own cost and expense, shall maintain
commercial general liability insurance for the term of this Agreement in an amount
not less than $1,000,000 and automobile liability insurance for the term of this
Agreement in an amount not less than $1,000,000 per occurrence, combined
single limit coverage for risks associated with the work contemplated by this
Agreement. If a Commercial General Liability Insurance or an Automobile Liability
form or other form with a general aggregate limit is used, either the general
aggregate limit shall apply separately to the work to be performed under this
Agreement or the general aggregate limit shall be at least twice the required
occurrence limit. Such coverage shall include but shall not be limited to, protection
against claims arising from bodily and personal injury, including death resulting
therefrom, and damage to property resulting from activities contemplated under
this Agreement, including without limitation, blanket contractual liability and the
use of owned and non-owned automobiles.
Attachment #2
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4.2.2 Minimum Scope of Coverage. Commercial general coverage shall be at least as
broad as Insurance Services Office Commercial General Liability occurrence form
CG 0001 (most recent edition) covering comprehensive General Liability on an
“occurrence” basis. Automobile coverage shall be at least as broad as Insurance
Services Office Automobile Liability form CA 0001, Code 1 (any auto). No
endorsement shall be attached limiting the coverage.
4.2.3 Additional Requirements. Each of the following shall be included in the
insurance coverage or added as a certified endorsement to the policy:
a. The Insurance shall cover on an occurrence or an accident basis, and not
on a claims-made basis.
b. City, its officers, officials, employees, and volunteers are to be covered as
additional insureds as respects: liability arising out of work or operations
performed by or on behalf of the Consultant; or automobiles owned,
leased, hired, or borrowed by the Consultant.
c. Consultant hereby agrees to waive subrogation which any insurer or
contractor may require from vendor by virtue of the payment of any loss.
Consultant agrees to obtain any endorsements that may be necessary to
effect this waiver of subrogation.
d. For any claims related to this Agreement or the work hereunder, the
Consultant’s insurance coverage shall be primary insurance as respects
the City, its officers, officials, employees, and volunteers. Any insurance
or self-insurance maintained by the City, its officers, officials, employees,
or volunteers shall be excess of the Consultant’s insurance and shall not
contribute with it.
4.2.4 Submittal Requirements. To comply with Subsection 4.2, Consultant shall
submit the following:
a. Certificate of Liability Insurance in the amounts specified in the section;
b. Additional Insured Endorsement as required by the section;
c. Waiver of Subrogation Endorsement as required by the section; and
d. Primary Insurance Endorsement as required by the section.
4.3 Professional Liability Insurance.
4.3.1 General Requirements. Consultant, at its own cost and expense, shall maintain
for the period covered by this Agreement professional liability insurance for
licensed professionals performing work pursuant to this Agreement in an amount
Attachment #2
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Consulting Services Agreement between City of Dublin and July 1, 2022
Chandler Asset Management for Investment and Asset Management Services Page 6 of 14
not less than $2,000,000 covering the licensed professionals’ errors and
omissions. Any deductible or self-insured retention shall not exceed $150,000 per
claim.
4.3.2 Claims-Made Limitations. The following provisions shall apply if the professional
liability coverage is written on a claims-made form:
a. The retroactive date of the policy must be shown and must be before the
date of the Agreement.
b. Insurance must be maintained and evidence of insurance must be
provided for at least 3 years after completion of the Agreement or the
work, so long as commercially available at reasonable rates.
c. If coverage is canceled or not renewed and it is not replaced with another
claims-made policy form with a retroactive date that precedes the date of
this Agreement, Consultant shall purchase an extended period coverage
for a minimum of 3 years after completion of work under this Agreement.
d. A copy of the claim reporting requirements must be submitted to the City
for review prior to the commencement of any work under this Agreement.
4.3.3 Submittal Requirements. To comply with Subsection 4.3, Consultant shall
submit the Certificate of Liability Insurance in the amounts specified in the section.
4.4 All Policies Requirements.
4.4.1 Acceptability of Insurers. All insurance required by this section is to be placed
with insurers with a Bests' rating of no less than A:VII.
4.4.2 Verification of Coverage. Prior to beginning any work under this Agreement,
Consultant shall furnish City with complete copies of all Certificates of Liability
Insurance delivered to Consultant by the insurer, including complete copies of all
endorsements attached to the policies. All copies of Certificates of Liability
Insurance and certified endorsements shall show the signature of a person
authorized by that insurer to bind coverage on its behalf. If the City does not
receive the required insurance documents prior to the Consultant beginning work,
it shall not waive the Consultant’s obligation to provide them. The City reserves
the right to require complete copies of all required insurance policies at any time.
4.4.3 Deductibles and Self-Insured Retentions. Consultant shall disclose to and
obtain the written approval of City for the self-insured retentions and deductibles
before beginning any of the services or work called for by any term of this
Agreement. At the option of the City, either: the insurer shall reduce or eliminate
such deductibles or self-insured retentions as respects the City, its officers,
employees, and volunteers; or the Consultant shall provide a financial guarantee
Attachment #2
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Consulting Services Agreement between City of Dublin and July 1, 2022
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satisfactory to the City guaranteeing payment of losses and related investigations,
claim administration and defense expenses.
4.4.4 Wasting Policies. No policy required by this Section 4 shall include a “wasting”
policy limit (i.e. limit that is eroded by the cost of defense).
4.4.5 Endorsement Requirements. Each insurance policy required by Section 4 shall
be endorsed to state that coverage shall not be canceled by either party, except
after 30 days’ prior written notice has been provided to the City.
4.4.6 Subcontractors. Consultant shall include all subcontractors as insureds under its
policies or shall furnish separate certificates and certified endorsements for each
subcontractor. All coverages for subcontractors shall be subject to all of the
requirements stated herein.
4.5 Remedies. In addition to any other remedies City may have if Consultant fails to provide
or maintain any insurance policies or policy endorsements to the extent and within the time
herein required, City may, at its sole option exercise any of the following remedies, which
are alternatives to other remedies City may have and are not the exclusive remedy for
Consultant’s breach:
Obtain such insurance and deduct and retain the amount of the premiums for such
insurance from any sums due under the Agreement;
Order Consultant to stop work under this Agreement or withhold any payment that
becomes due to Consultant hereunder, or both stop work and withhold any payment,
until Consultant demonstrates compliance with the requirements hereof; and/or
Terminate this Agreement.
Section 5. INDEMNIFICATION AND CONSULTANT’S RESPONSIBILITIES. Refer to the attached
Exhibit C, which is incorporated herein and made a part of this Agreement.
Section 6. STATUS OF CONSULTANT.
6.1 Independent Contractor. At all times during the term of this Agreement, Consultant shall
be an independent contractor and shall not be an employee of City. This Agreement shall
not be construed as an agreement for employment. City shall have the right to control
Consultant only insofar as the results of Consultant's services rendered pursuant to this
Agreement and assignment of personnel pursuant to Subsection 1.3; however, otherwise
City shall not have the right to control the means by which Consultant accomplishes
services rendered pursuant to this Agreement. Consultant further acknowledges that
Consultant performs Services outside the usual course of the City’s business; and is
customarily engaged in an independently established trade, occupation, or business of the
same nature as the Consultant performs for the City and has the option to perform such
work for other entities. Notwithstanding any other City, state, or federal policy, rule,
Attachment #2
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regulation, law, or ordinance to the contrary, Consultant and any of its employees, agents,
and subcontractors providing services under this Agreement shall not qualify for or
become entitled to, and hereby agree to waive any and all claims to, any compensation,
benefit, or any incident of employment by City, including but not limited to eligibility to
enroll in the California Public Employees Retirement System (PERS) as an employee of
City and entitlement to any contribution to be paid by City for employer contributions and/or
employee contributions for PERS benefits.
6.2 Consultant Not an Agent. Except as City may specify in writing, Consultant shall have no
authority, express or implied, to act on behalf of City in any capacity whatsoever as an
agent. Consultant shall have no authority, express or implied, pursuant to this Agreement
to bind City to any obligation whatsoever, except as authorized in this Agreement.
Section 7. LEGAL REQUIREMENTS.
7.1 Governing Law. The laws of the State of California shall govern this Agreement.
7.2 Compliance with Applicable Laws. Consultant and any subcontractors shall comply with
all laws and regulations applicable to the performance of the work hereunder, including but
not limited to, the California Building Code, the Americans with Disabilities Act, and any
copyright, patent or trademark law. Consultant’s failure to comply with any law(s) or
regulation(s) applicable to the performance of the work hereunder shall constitute a breach
of contract.
7.3 Other Governmental Regulations. To the extent that this Agreement may be funded by
fiscal assistance from another governmental entity, Consultant and any subcontractors
shall comply with all applicable rules and regulations to which City is bound by the terms of
such fiscal assistance program.
7.4 Licenses and Permits. Consultant represents and warrants to City that Consultant and
its employees, agents, and any subcontractors have all licenses, permits, qualifications,
and approvals of whatsoever nature that are legally required to practice their respective
professions. Consultant represents and warrants to City that Consultant and its
employees, agents, any subcontractors shall, at their sole cost and expense, keep in effect
at all times during the term of this Agreement any licenses, permits, and approvals that are
legally required to practice their respective professions. In addition to the foregoing,
Consultant and any subcontractors shall obtain and maintain during the term of this
Agreement valid Business Licenses from City.
7.5 Nondiscrimination and Equal Opportunity. Consultant shall not discriminate, on the
basis of a person’s race, sex, gender, religion (including religious dress and grooming
practices), national origin, ancestry, physical or mental disability, medical condition
(including cancer and genetic characteristics), marital status, age, sexual orientation, color,
creed, pregnancy, genetic information, gender identity or expression, political affiliation or
belief, military/veteran status, or any other classification protected by applicable local,
state, or federal laws (each a “Protected Characteristic”), against any employee, applicant
Attachment #2
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for employment, subcontractor, bidder for a subcontract, or participant in, recipient of, or
applicant for any services or programs provided by Consultant under this Agreement.
Consultant shall include the provisions of this Subsection in any subcontract approved by
the Contract Administrator or this Agreement.
Section 8. TERMINATION AND MODIFICATION.
8.1 Termination. City may cancel this Agreement at any time and without cause upon written
notification to Consultant.
Consultant may cancel this Agreement upon 30 days’ written notice to City and shall
include in such notice the reasons for cancellation.
In the event of termination, Consultant shall be entitled to compensation for services
performed to the effective date of termination; City, however, may condition payment of
such compensation upon Consultant delivering to City any or all documents, photographs,
computer software, video and audio tapes, and other materials provided to Consultant or
prepared by or for Consultant or the City in connection with this Agreement.
8.2 Extension. City may, in its sole and exclusive discretion, extend the end date of this
Agreement beyond that provided for in Subsection 1.1. Any such extension shall require a
written amendment to this Agreement, as provided for herein. Consultant understands and
agrees that, if City grants such an extension, City shall have no obligation to provide
Consultant with compensation beyond the maximum amount provided for in this
Agreement. Similarly, unless authorized by the Contract Administrator, City shall have no
obligation to reimburse Consultant for any otherwise reimbursable expenses incurred
during the extension period.
8.3 Amendments. The Parties may amend this Agreement only by a writing signed by all the
Parties.
8.4 Assignment and Subcontracting. City and Consultant recognize and agree that this
Agreement contemplates personal performance by Consultant and is based upon a
determination of Consultant’s unique personal competence, experience, and specialized
personal knowledge. Moreover, a substantial inducement to City for entering into this
Agreement was and is the professional reputation and competence of Consultant.
Consultant may not assign this Agreement or any interest therein without the prior written
approval of the Contract Administrator. Consultant shall not subcontract any portion of the
performance contemplated and provided for herein, other than to the subcontractors noted
in the proposal, without prior written approval of the Contract Administrator.
8.5 Survival. All obligations arising prior to the termination of this Agreement and all
provisions of this Agreement allocating liability between City and Consultant shall survive
the termination of this Agreement.
Attachment #2
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8.6 Options upon Breach by Consultant. If Consultant materially breaches any of the terms
of this Agreement, City’s remedies shall include, but are not limited to, the following:
8.6.1 Immediately terminate the Agreement;
8.6.2 Retain the plans, specifications, drawings, reports, design documents, and any
other work product prepared by Consultant pursuant to this Agreement;
8.6.3 Retain a different consultant to complete the work described in Exhibit A not
finished by Consultant; or
8.6.4 Charge Consultant the difference between the cost to complete the work
described in Exhibit A that is unfinished at the time of breach and the amount that
City would have paid Consultant pursuant to Section 2 if Consultant had
completed the work.
Section 9. KEEPING AND STATUS OF RECORDS.
9.1 Records Created as Part of Consultant’s Performance. All reports, data, maps,
models, charts, studies, surveys, photographs, memoranda, plans, studies, specifications,
records, files, or any other documents or materials, in electronic or any other form, that
Consultant prepares or obtains pursuant to this Agreement and that relate to the matters
covered hereunder shall be the property of the City. Consultant hereby agrees to deliver
those documents to the City upon termination of the Agreement. It is understood and
agreed that the documents and other materials, including but not limited to those described
above, prepared pursuant to this Agreement are prepared specifically for the City and are
not necessarily suitable for any future or other use. City and Consultant agree that, until
final approval by City, all data, plans, specifications, reports and other documents are
confidential and will not be released to third parties without prior written consent of both
Parties.
9.2 Consultant’s Books and Records. Consultant shall maintain any and all ledgers, books
of account, invoices, vouchers, canceled checks, and other records or documents
evidencing or relating to charges for services or expenditures and disbursements charged
to the City under this Agreement for a minimum of 3 years, or for any longer period
required by law, from the date of final payment to the Consultant to this Agreement.
9.3 Inspection and Audit of Records. Any records or documents that Subsection 9.2 of this
Agreement requires Consultant to maintain shall be made available for inspection, audit,
and/or copying at any time during regular business hours, upon oral or written request of
the City. Under California Government Code Section 8546.7, if the amount of public funds
expended under this Agreement exceeds $10,000.00, the Agreement shall be subject to
the examination and audit of the State Auditor, at the request of City or as part of any audit
of the City, for a period of 3 years after final payment under the Agreement.
Section 10. MISCELLANEOUS PROVISIONS.
Attachment #2
195
Consulting Services Agreement between City of Dublin and July 1, 2022
Chandler Asset Management for Investment and Asset Management Services Page 11 of 14
10.1 Attorneys’ Fees. If a party to this Agreement brings any action, including an action for
declaratory relief, to enforce or interpret the provision of this Agreement, the prevailing
party shall be entitled to reasonable attorneys’ fees in addition to any other relief to which
that party may be entitled. The court may set such fees in the same action or in a
separate action brought for that purpose.
10.2 Venue. In the event that either party brings any action against the other under this
Agreement, the Parties agree that trial of such action shall be vested exclusively in the
state courts of California in the County of Alameda or in the United States District Court for
the Northern District of California.
10.3 Severability. If a court of competent jurisdiction finds or rules that any provision of this
Agreement is invalid, void, or unenforceable, the provisions of this Agreement not so
adjudged shall remain in full force and effect. The invalidity in whole or in part of any
provision of this Agreement shall not void or affect the validity of any other provision of this
Agreement.
10.4 No Implied Waiver of Breach. The waiver of any breach of a specific provision of this
Agreement does not constitute a waiver of any other breach of that term or any other term
of this Agreement.
10.5 Successors and Assigns. The provisions of this Agreement shall inure to the benefit of
and shall apply to and bind the successors and assigns of the Parties.
10.6 Use of Recycled Products. Consultant shall prepare and submit all reports, written
studies and other printed material on recycled paper to the extent it is available at equal or
less cost than virgin paper.
10.7 Conflict of Interest. Consultant may serve other clients, but none whose activities within
the corporate limits of City or whose business, regardless of location, would place
Consultant in a “conflict of interest,” as that term is defined in the Political Reform Act,
codified at California Government Code Section 81000 et seq.
Consultant shall not employ any City official in the work performed pursuant to this
Agreement. No officer or employee of City shall have any financial interest in this
Agreement that would violate California Government Code Section 1090 et seq.
Consultant hereby warrants that it is not now, nor has it been in the previous 12 months,
an employee, agent, appointee, or official of the City. If Consultant was an employee,
agent, appointee, or official of the City in the previous 12 months, Consultant warrants that
it did not participate in any manner in the forming of this Agreement. Consultant
understands that, if this Agreement is made in violation of California Government Code
Section 1090 et seq., the entire Agreement is void and Consultant will not be entitled to
any compensation for services performed pursuant to this Agreement, including
reimbursement of expenses, and Consultant will be required to reimburse the City for any
Attachment #2
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Consulting Services Agreement between City of Dublin and July 1, 2022
Chandler Asset Management for Investment and Asset Management Services Page 12 of 14
sums paid to the Consultant. Consultant understands that, in addition to the foregoing, it
may be subject to criminal prosecution for a violation of California Government Code
Section 1090 et seq., and, if applicable, will be disqualified from holding public office in the
State of California.
At City’s sole discretion, Consultant may be required to file with the City a Form 700 to
identify and document Consultant’s economic interests, as defined and regulated by the
California Fair Political Practices Commission. If Consultant is required to file a Form 700,
Consultant is hereby advised to contact the Dublin City Clerk for the Form 700 and
directions on how to prepare it.
10.8 Solicitation. Consultant agrees not to solicit business at any meeting, focus group, or
interview related to this Agreement, either orally or through any written materials.
10.9 Contract Administration. This Agreement shall be administered by the City Manager
("Contract Administrator"). All correspondence shall be directed to or through the Contract
Administrator or his or her designee.
10.10 Notices. Any written notice to Consultant shall be sent to:
Chandler Asset Management
Attn: Nicole Dragoo
6225 Lusk Boulevard
San Diego, CA 92121
Any written notice to City shall be sent to:
City of Dublin
Attn: Jay Baksa
100 Civic Plaza
Dublin, CA 94568
10.11 Integration. This Agreement, including the scope of work attached hereto and
incorporated herein as Exhibits A, B, C, and D represents the entire and integrated
agreement between City and Consultant and supersedes all prior negotiations,
representations, or agreements, either written or oral.
Exhibit A Scope of Services
Exhibit B Compensation Schedule & Reimbursable Expenses
Exhibit C Indemnification
Exhibit D City of Dublin’s Investment Policy
10.12 Counterparts and Electronic Signatures. This Agreement may be executed in multiple
counterparts, each of which shall be an original and all of which together shall constitute
one agreement. Counterparts delivered and/or signatures executed by City-approved
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Consulting Services Agreement between City of Dublin and July 1, 2022
Chandler Asset Management for Investment and Asset Management Services Page 13 of 14
electronic or digital means shall have the same force and effect as the use of a manual
signature. Both Parties desire this Agreement to be electronically signed in accordance
with applicable federal and California law. Either Party may revoke its agreement to use
electronic signatures at any time by giving notice to the other Party.
10.13 Certification per Iran Contracting Act of 2010. In the event that this contract is for
one million dollars ($1,000,000.00) or more, by Consultant’s signature below Consultant
certifies that Consultant, and any parent entities, subsidiaries, successors or subunits of
Consultant are not identified on a list created pursuant to subdivision (b) of Section 2203 of
the California Public Contract Code as a person engaging in investment activities in Iran as
described in subdivision (a) of Section 2202.5, or as a person described in subdivision (b)
of Section 2202.5 of the California Public Contract Code, as applicable.
SIGNATURES ON FOLLOWING PAGE
Attachment #2
198
Consulting Services Agreement between City of Dublin and July 1, 2022
Chandler Asset Management for Investment and Asset Management Services Page 14 of 14
The Parties have executed this Agreement as of the Effective Date. The persons whose signatures appear
below certify that they are authorized to sign on behalf of the respective Party.
CITY OF DUBLIN CHANDLER ASSET MANAGEMENT
Linda Smith, City Manager Nicole Dragoo, President
Attest:
Marsha Moore, City Clerk
Approved as to Form:
City Attorney
3070368.1
Attachment 2
199
Consulting Services Agreement between City of Dublin and July 1, 2022
Chandler Asset Management for Investment and Asset Management Services Exhibit A – Page 1 of 3
EXHIBIT A
SCOPE OF SERVICES
Consultant shall provide the following services:
Consultant shall provide investment management and advisory services for the City on all funds, as
authorized by the City Council and directed by Staff to be managed by Consultant. The Consultant shall
provide the additional related services, which shall include but not be limited to the following:
a) Assisting the City, as the City deems necessary, in analyzing its cash flow requirements to
determine the amount of funds to be invested with Consultant.
b) Assisting the City, as the City deems necessary, in determining its investment risk tolerance and
appropriate portfolio benchmark.
c) Meeting with City staff, from time to time as reasonably requested by City, to review the investment
portfolio and performance.
d) On an annual basis, reviewing and recommending changes to the City’s Investment Policy based
on legislative changes and other relevant market conditions.
e) Providing the City with on-line access to real-time information on the City’s investment positions
and providing monthly investment reports for the City.
f) Providing other investment-related services as agreed upon.
Additional Provisions
1. City Representative. In its capacity as investment manager, Consultant shall receive all
instructions, directions and other communications on City's behalf respecting City's account from
the Representative designated from time to time by the City Manager. The City Manager has
designated Lisa Hisatomi, Administrative Services Director as the Representative. Consultant is
hereby authorized to rely and act upon all such instructions, directions and communications from
such Representative or any agent of such Representative.
2. Investment Policy. In investing and reinvesting City’s assets, Consultant shall comply with City’s
Investment Policy, the current version of which is attached as Exhibit _D_ to the Agreement.
3. Authority of Consultant. Consultant is hereby granted full discretion to invest and reinvest all assets
under its management in any type of security it deems appropriate, subject to compliance with the
Investment Policy and instructions given or guidelines set by the Representative.
4. Electronic Delivery. From time to time, Consultant may be required to deliver certain documents to
City such as account information, notices and required disclosures. City hereby consents to
Consultant’s use of electronic means, such as email, to make such delivery. This delivery may
include notification of the availability of such document(s) on a website, and City agrees that such
notification will constitute “delivery”. City further agrees to provide Consultant with City’s email
address(s) and to keep this information current at all times by promptly notifying Consultant of any
change in email address(s).
Attachment #2
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Consulting Services Agreement between City of Dublin and July 1, 2022
Chandler Asset Management for Investment and Asset Management Services Exhibit A – Page 2 of 3
City email address(s):admin.service@dublin.ca.gov
5. Proxy Voting. Consultant will vote proxies on behalf of City unless otherwise instructed. Consultant
has adopted and implemented written policies and procedures and will provide City with a
description of the proxy voting procedures upon request. Consultant will provide information
regarding how City’s proxies were voted upon request. To request proxy policies or other
information, please contact us by mail at the address provided, by calling 800-317-4747, or by
emailing your request to compliance@chandlerasset.com.
6. Custody of Securities and Funds. Consultant shall not have custody or possession of the funds or
securities that City has placed under its management. City shall appoint a custodian to take and
have possession of its assets. City recognizes the importance of comparing statements received
from the appointed custodian to statements received from Consultant. City recognizes that the fees
expressed above do not include fees City will incur for custodial services.
7. Valuation. Consultant will value securities held in portfolios managed by Consultant no less than
monthly. Securities or investments in the portfolio will be valued in a manner determined in good
faith by Consultant to reflect fair market value.
8. Investment Advice. City recognizes that the opinions, recommendations and actions of Consultant
will be based on information deemed by it to be reliable, but not guaranteed to or by it. Provided
that Consultant acts in accordance with the standards set out in Section 1.2 of the Agreement, City
agrees that Consultant will not in any way be liable for any error in judgment or for any act or
omission, except as may otherwise be provided for under the Federal Securities laws or other
applicable laws.
9. Payment of Commissions. Consultant may place buy and sell orders with or through such brokers
or dealers as it may select. It is the policy and practice of Consultant to strive for the best price and
execution and for commission and discounts which are competitive in relation to the value of the
transaction and which comply with Section 28(e) of the Securities and Exchange Act.
Nevertheless, it is understood that Consultant may pay a commission on transactions in excess of
the amount another broker or dealer may charge, and that Consultant makes no warranty or
representation regarding commissions paid on transactions hereunder.
10. Other Clients. It is further understood that Consultant may be acting in a similar capacity for other
institutional and individual clients, and that investments and reinvestments for City's portfolio may
differ from those made or recommended with respect to other accounts and clients even though
the investment objectives may be the same or similar. Accordingly, it is agreed that Consultant will
have no obligation to purchase or sell for City's account any securities which it may purchase or
sell for other clients.
11. Confidential Relationship. The terms and conditions of this Agreement, and all information and
advice furnished by either party to the other shall be treated as confidential and shall not be
disclosed to third parties except (i) as required by law, rule, or regulation, (ii) as requested by a
regulatory authority, (iii) for disclosures by either party of information that has become public by
means other than wrongful conduct by such party or its officers, employees, or other personnel, (iv)
Attachment #2
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Consulting Services Agreement between City of Dublin and July 1, 2022
Chandler Asset Management for Investment and Asset Management Services Exhibit A – Page 3 of 3
for disclosures by either party to its legal counsel, accountants, or other professional advisers, (v)
as necessary for Consultant to carry out its responsibilities hereunder, or (vi) as otherwise
expressly agreed by the parties.
12. Receipt of Brochure and Privacy Policy. City has received the disclosure statement or "brochure"
and “brochure supplement” also known as Part 2A and Part 2B of Form ADV, required to be
delivered pursuant to Rule 204-3 of the Investment Advisers Act of 1940 (Brochure). City has
received a copy of Consultant’s Privacy Policy.
Attachment #2
202
Consulting Services Agreement between City of Dublin and July 1, 2022
Chandler Asset Management for Investment and Asset Management Services Exhibit B – Page 1 of 1
EXHIBIT B
COMPENSATION SCHEDULE OVERVIEW
City shall compensate Consultant monthly an amount calculated on the average market value of City’s
portfolio, including accrued interest, in accordance with the following schedule:
Assets Under Management Annual Investment Management Fee
First $75 million 0.07 of 1% (7 basis points)
Next $75 million 0.06 of 1% (6 basis points)
Assets in excess of $150 million 0.05 of 1% (5 basis points)
The fees expressed above do not include any custody fees that may be charged by City’s bank or other
third party custodian. The City is not required to pay any start-up or closing fees; there are no penalty fees.
There are no additional costs associated with the sale and purchase of securities, other than those that
may be imposed by the custodian.
Fees shall be prorated to the effective date of termination of the agreement on the basis of actual days
elapsed, and any unearned portion of prepaid fees shall be refunded.
The fee schedule is all-inclusive for the services that the Consultant will provide the City, including personal
visits and education offerings for staff.
Fees shall be deducted monthly in arrears from City’s custody account. There is no annual minimum
required.
Attachment #2
203
CHANDLER ASSET MANAGEMENT, INC.
6225 Lusk Boulevard
San Diego, California 92121
Direct: 858-546-3737, Toll free: 800-317-4747
info@chandlerasset.com | chandlerasset.com
Request for Proposals for:
DUBLIN CALIFORNIA
INVESTMENT ADVISORY SERVICES
DUE: APRIL 15, 2022 5 PM
EXHIBIT B Attachment #2
204
Request for Proposals for
Investment Advisory Services
CITY OF DUBLIN, CALIFORNIA
TABLE OF CONTENTS
1.COVER LETTER ..............................................................................................................................................1
2.FIRM BACKGROUND AND ORGANIZATION ..................................................................................................2
3.STAFFING ......................................................................................................................................................5
4.FEES ..............................................................................................................................................................9
5.ASSETS UNDER MANAGEMENT ................................................................................................................ 10
6.INVESTMENT MANAGEMENT DISCIPLINE AND APPROACH ..................................................................... 12
7.PORTFOLIO MANAGEMENT ...................................................................................................................... 21
8.PORTFOLIO REPORTING ............................................................................................................................ 24
9.REFERENCES .............................................................................................................................................. 27
10. CONFIRMATION ........................................................................................................................................ 27
CHANDLER APPENDICES
Attachment #2
*Removed as part of the Staff Report
205
April 14, 2022
The City of Dublin
Attention: Jay Baksa
100 Civic Plaza
Dublin, California 94568
Sent via: email Jay.Baksa@dublin.ca.gov
RE: Request for Proposals – Investment Advisory Services
Dear Mr. Baksa,
Chandler Asset Management has had the privilege of providing investment advisory services to the
City of Dublin since 2013. We appreciate this opportunity to extend our relationship with you
and herein respectfully submit our Proposal for Investment Advisory Services. Although the
City’s staff is already acquainted with our firm and the quality of services that we provide, we
hope to highlight the benefits of continuing to work with Chandler. Our investment approach is
based on an investment philosophy developed in response to the shared objectives of all our
public agency clients, which emphasizes safety, liquidity, and return. In addition to providing
disciplined investment advisory services, our goal is to continue to provide consistency and
continuity for the City of Dublin, so that you and your staff can focus on serving your community.
While this proposal is only a summary of the services that we have provided throughout our
engagement with the City, we look forward to discussing any additional areas to assist you to further
enhance the overall investment program beyond those listed in the RFP.
As the firm’s President, I am authorized to bind the firm and to act in this capacity, as well as to
confirm our intent to bid on all sections of the City’s Scope of Work. I certify that the information
provided in our proposal is accurate, firm, and irrevocable, and shall be valid for a period of 90 days
from April 15, 2022.
We look forward to discussing our qualifications with you in person. If you have any questions
during the proposal evaluation period, please do not hesitate to contact William Dennehy, CFA,
Co-CIO, directly at (858) 888-5087, toll-free (800) 317-4747, or via email
at wdennehy@chandlerasset.com. Additionally, you can contact Neil Murthy, Relationship
Manager, directly at (858) 245-4869, toll-free (800) 317-4747, or via email at
amurthy@chandlerasset.com.
Sincerely,
CHANDLER ASSET MANAGEMENT, INC.
Nicole Dragoo, JD, IACCP
President
6225 Lusk Boulevard | San Diego, CA 92121 | Phone 800.317.4747 | chandlerasset.com
Attachment #2
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2. FIRM BACKGROUND AND ORGANIZATION
a. Describe your organization, date founded, ownership and other business affiliations. Provide number
and location of affiliated offices. Specify the number of years your organization has provided
investment management service.
Chandler Asset Management Inc.’s (“Chandler”) core expertise is providing fully customized, high quality
fixed-income investment solutions for public agency clients. We are experts in managing public funds,
providing excellent stewardship over the investment activities entrusted to us, and have, for over three
decades, performed our fiduciary duty with discipline and care. Our firm provides comprehensive
investment solutions for local governments that are guided by the objectives of preservation of principal,
access to liquid funds, and maximization of investment returns within established risk parameters and
legal requirements. From our over three decades of experience and client-focused approach, we
understand firsthand the challenges of investing in public funds in a world with dynamic financial
markets and economic conditions.
History
Chandler was founded in 1988 by Kay Chandler as a result of her experience serving as Investment Officer
for the County of San Diego for eight years, and for the City of San Diego for another two years. With
many responsibilities for treasury management and finance functions within these departments, Ms.
Chandler recognized that public entities with limited time and resources could benefit from external
professional expertise and technological resources to help manage their investment programs. In 1991,
Martin Cassell, Ms. Chandler’s successor on the investment staff of the City of San Diego, joined the firm.
Mr. Cassell now serves as Chandler’s CEO.
Over the years, Ms. Chandler and Mr. Cassell carefully assembled a team of professionals with the
specialized professional expertise and technical skills necessary to structure highly effective, fixed
income cash and core investment programs for cities, counties, and other local government entities. The
firm manages $25.8 billion as of December 31, 2021, including $21 billion in separately managed
accounts for 175 public agencies. All of the firm’s Portfolio Managers are CFA charter holders and are
committed to strengthening and sharing their knowledge of prudent standards of investment
management for public funds. The comprehensive services we offer including portfolio management,
regulatory guidance, and increased transparency through comprehensive reporting are designed to
meet the specific needs of public agencies.
Chandler remains committed to our principles of conservative fixed income management as the firm
continues to evolve in response to our clients’ needs and to the public investment climate. As a result of
our significant growth and in support of our objectives, we serve our clients from six other offices besides
our San Diego headquarters, located in Denver, Colorado; Orlando, Florida; Ventura, California; Walnut
Creek, California; Marin County, California; and Seattle, Washington. The firm’s professional staff
currently totals thirty-seven (37) individuals and includes twelve (12) investment team members.
Firm Structure and Ownership
Chandler is an independent and 100% employee-owned California corporation. In 2017, Chandler’s key
shareholders and Executive Management Team introduced an Employee Stock Ownership Plan (“ESOP”)
that aligns with the firm’s values and culture of shared success. Every employee is an owner through the
ESOP Trust, which owns 68% of the firm and is the primary shareholder. Key employees from the
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Executive Management Team remain as individual owners. We believe that this structure contributes to
our ability to attract and retain the highest quality investment professionals as well as to sustain growth,
promote accountability, and best serve current and prospective clients well into the future.
One of the firm’s guiding principles is participation in the development of best practices in the
management of public funds. Our investment and client service professionals serve as committee
members and are active participants and sponsors of national and regional associations that develop
recommended best practices and training curricula, including the Government Finance Officers
Association (GFOA), the California Society of Municipal Finance Officers (CSMFO), the California
Municipal Treasurers Association (CMTA), the California Debt and Investment Advisory Commission
(CDIAC), and the CFA Institute. We are often involved in drafting investment legislation and
recommending best practices on a state and national level and providing guidance on safe and effective
practices for the management of public funds. In addition, Martin Cassell, CFA, CEO, sat on the GFOA’s
Committee on Treasury and Investment Management. This committee tracks new developments in cash
management and develops best practices for government officials at all levels.
Chandler qualifies as a Small Business in California through the Department of General Services, with
certification ID 1747894, expiring September 30, 2023.
b. Describe your firm’s revenue sources (e.g., investment management, institutional research, etc).
The firm’s revenue is derived entirely from fees received from our clients for the investment
management and/or advisory services we provide. Chandler does not act as a broker or dealer in
securities or receive any other form of additional compensation from third-party sales arrangements,
investment pool management, research exchanges, or transaction fees. As of our most recent fiscal year
end, approximately 90% of the firm’s revenue is derived from institutional accounts. The remaining
revenue is derived from Chandler’s strategies that are offered to select Registered Investment Advisers
on platforms for sub-advised services.
c. Within the past three years, have there been any significant developments in your organization (e.g.,
changes in ownership, new business ventures)? Do you expect any changes in the near future?
In 2022, William Dennehy II, CFA, Scott Prickett, CTP, and Jayson Schmitt, CFA were promoted to Co-
Chief Investment Officers. Martin Cassell, CFA, CEO transitioned all CIO responsibilities to the three new
CO-CIOs as of January 1, 2022. Nicole Dragoo, Chandler’s COO and Chief Compliance Officer was
promoted to President in April 2021. Joseph Kolinsky, hired as Compliance Manager in January 2020
now serves as Chief Compliance Officer. Other additions to the staff include Ryan Tauber, MBA,
Managing Director of Business Development, who oversees the firm’s sales, marketing, and client service
efforts. Chandler continues to create new positions to accommodate growing business demands.
d. Describe any U.S. Securities and Exchange Commission (SEC) censures or litigation involving your
organization, any officer, or employee at any time.
Neither Chandler nor any of its officers or employees has ever been subject to any regulatory censure or
litigation by the SEC, NASD, or other regulatory agencies regarding the investment management and
advisory services it provides.
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e. Identify the types of accounts managed by your firm (e.g., government, pension, corporate, high net
worth, and endowment/foundation).
Chandler manages portfolios that are comprised of asset classes in the U.S. fixed income universe that
align with our clients’ objectives of safety, liquidity, and return. In California, these are assets that are
permitted by California Government Code 53601 and 53635. The composition of Chandler’s portfolios
includes high quality, short-term investment-grade, U.S. dollar-denominated securities including but not
limited to: U.S. Treasuries, Federal Agencies, municipal bonds, negotiable CDs, Corporate notes,
Supranational securities, asset-backed and mortgage backed securities. We provide complete
investment services for a public entity investment program, including:
• Operating Funds • Debt Service Funds
• General Revenue Funds • Reserve Funds
• Bond Proceeds • Post-Employment Benefit
• Capital Project Funds • JPA Investment Funds
Chandler Client Types and Total Firm Assets Under Management
As of December 31, 2021
Client Type # of
Accounts
AUM
($MM)*
Public Sector 347 $20,794
Corporate 13 $52
Healthcare 34 $4,350
Non-profit 31 $153
Sub-advised 308 $218
Other 11 $44
Total 744 $25,611
*Other includes DC Plan, Church and Higher Education
assets. Chandler assets under management as of
12/31/2021.
Northern California Clients
Alameda County
Water District City of Cupertino City of Pittsburg CJPRMA
Alpine County City of Dublin City of Pleasant Hill CSJVRMA
Amador County City of Elk Grove City of San Leandro First 5 Alameda County
Big Independent Cities
Excess Pool City of Fairfield City of San Mateo First 5 Santa Clara
County
Calaveras County City of Merced City of Shasta Lakes Mendocino County
Corporate
<1%Non Profit
1%
Healthcare
17%
Sub-advisory
1%
Public
81%
Assets Under Management
$25.8 Billion
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California Earthquake
Authority City of Milpitas City of South San
Francisco NCCSIF
City of Alameda City of Monterey City of Sunnyvale Sierra County
City of American
Canyon City of Mountain View City of Vallejo Town of Danville
City of Atwater City of Orinda City of West
Sacramento Truckee
*The list includes Northern California clients as of 12/31/2021 listed alphabetically and only includes clients that have given permission to
be listed. It is not known whether the clients listed approve or disapprove of Chandler Asset Management and the investment advisory
services provided. Includes discretionary and non-discretionary relationships.
The above clients’ accounts include operating cash and reserves, bond project accounts, and bond
reserves, each separately managed to fulfill its specific objectives within its own risk profile. We propose
to manage the City’s portfolio in a manner that is customized to meet your specific financial and
investment goals and would provide you with the same level of diligence, client service and investment
expertise that we provide to all our clients.
f. Describe your firm’s fiduciary liability and/or errors and omissions insurance coverage. Include dollar
amount of coverage.
Chandler maintains a comprehensive, full-coverage insurance program with the relevant coverages
provided by firms rated “Excellent” or better by AM Best Rating, including the following:
EO/DO (professional liability) $30 million ($200,000 retention)
Fidelity Bond/Employee Dishonesty: $10 million/$100,000 deductible
Commercial General Liability: $2,000,000 per occurrence/$4,000,000 aggregate
Umbrella Liability: $10,000,000 per occurrence/$10,000,000 aggregate
Cybersecurity: $4,000,000
Automobile Liability: $1,000,000 combined single limit
In addition, each ERISA plan is insured to 10% of the plan’s asset values, not to exceed $500,000 per
insured plan. We have included a copy of our ACORD Certificate of Liability in the Appendix.
3. STAFFING
a. Identify the number of professionals employed by your firm by classification.
Chandler Asset Management has a staff of thirty-seven (37) professionals, who are categorized as
follows:
Chandler Asset Management Professional Staff
Classification # of Professionals
CEO 1
President 1
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Chief Investment Officers 3
Investment Management and Research 8
Client Service & Marketing 12
Operations 6
Compliance 3
Administration/Human Resources 3
Total 37
The entire Investment Management Team is responsible for providing investment advice and
management of funds to our public agency clients, as well as for research, analysis, strategy
development, and oversight of the firm’s investment management processes. The firm’s investment
committee consists of twelve investment professionals.
b. Provide an organizational chart showing functions, positions, and titles of all the professionals in your
organization.
Please find Chandler’s organizational chart showing the functions, positions, and titles of all the
professionals within the organization.
Chandler Asset Management Organizational Chart
As of March 31, 2022
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c. Provide biographical information on investment professionals who will be involved in the decision-
making process for the City’s portfolio, including number of years at your firm. Identify the person
who will be the primary portfolio manager assigned to the account.
The following table shows the Chandler team of investment professionals assigned to the City of Dublin
relationship, including their responsibilities and tasks.
Investment Professionals Assigned to the City
Contact Name and Title Role in Engagement Industry
Tenure
Firm
Tenure Education
Investment Management
William Dennehy II, CFA
Co-Chief Investment
Officer
• CO-CIO
• Implements portfolio
strategies
• Research and Analysis
• Co-Chair of Credit
Committee and Economic
and Market Analysis
Committee and member
of the MAC Committee.
30 years 11 years
B.S. Business
Administration,
California State
University, Chico,
Chartered Financial
Analyst
CFA® charter holder
Dan Delaney
Senior Portfolio Manager
• Senior Portfolio Manager
• Implements portfolio
strategies
• Performs credit analysis
• Co-Chair of Sector
Committee and member
of the Credit Committee.
16 years 1 year
B.A., Business
Economics,
University of Exeter,
UK, Chartered
Financial Analyst
CFA® charter holder
Engagement Management & Client Service
Aneil (Neil) Murthy
Relationship Manager
• Relationship Manager &
Key Contact
• Conducts onboarding
process
• Oversees client
communication
Ensures and coordinates
project deliverables
13 years 2 years
B.A. Political
Science, University
of Connecticut;
M.B.A., Post
University
Series 65 License
Stacey Alderson
Senior Client Service
Manager
• Client Service Contact
• Reviews Investment Policy
• Schedules training and
educational presentations
24 years 8 years
B.B.A. Accounting,
University of
Montevallo
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Compliance & Oversight
Nicole Dragoo, JD, IACCP
President
• Head of Firm Compliance,
Operations,
Administration
• Responsible for regulatory
compliance and legal
matters
• Oversees firm’s
operations and
administrative functions
22 years 21 years
B.A. Business
Economics, J.D.
University of San
Diego; Investment
Adviser Certified
Compliance
Professional (IACCP)
designation
Portfolio Managers. Drawing from their collective expertise, the Investment Management Team
develops and implements strategies for the City based on a thorough, well-rounded analysis of
investment ideas that are specific to the strategy and your investment objectives.
William (“Bill”) Dennehy II (CFA), Co-Chief Investment Officer, will serve as the primary portfolio manager
for the City. Bill also serves as a member of the firm’s Executive Committee, Multi-Asset Class Committee,
and is Co-Chair of the firm’s Economic, Market Analysis Committee and Credit Committee, and Multi-Asset
Class Committee.
Daniel Delaney, Senior Portfolio Manager, will serve as the secondary portfolio manager for the City. He
is responsible for implementing portfolio strategy and securities trading in client accounts.
Dan serves as Co-Chair of the Sector Committee.
Client Service
Neil Murthy (MBA) will be the Relationship Manager and another key contact for the City. Located in
Walnut Creek, Neil will help coordinate all aspects of the City’s service needs, develop a City-led schedule
of regular in-person client meetings, as well as attend meetings, along with your primary investment
contacts.
Stacey Alderson, CTP, Client Service Manager will support Scott in serving the City and its staff. Scott
and Stacey are in our Denver office and will be accessible as local resources for any calls or in-person
visits. Your relationship managers will work closely with you – reviewing investment policies, assisting
with custodial relationships, and providing investment training among other things. Chandler’s client
service and marketing teams provide responsive service and follow-through to completion for any
pressing or immediate needs of the City and its staff. Our client service personnel are adept at handling
the non-investment needs of the engagement and will escalate any issues and route them through the
correct channels, if necessary.
Compliance and Oversight
The firm’s President, Nicole Dragoo, JD (IACCP), is responsible for the firm’s strategy and administration
and oversees the compliance and operations departments. She also leads the onboarding process of
new client accounts and heads a team that communicates effectively with accountants, custodians, and
administrators during the transition period and for the duration of the relationship.
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4. FEES
a. Please include a copy of your firm’s fee schedule applicable to this RFP.
Chandler is pleased to provide comprehensive, full-time discretionary investment management
(advisory) services to the City as described herein Chandler’s proposal and in the City’s Scope of Services
in accordance with the following fee schedule:
Proposed Fee Schedule for the City of Dublin
Assets Under Management Annual Asset Management Fee
First $75 million 0.07 of 1% (7 basis points)
Next $75 million 0.06 of 1% (6 basis points)
Assets over $150 million 0.05 of 1% (5 basis points)
Our proposed fee schedule is all-inclusive for the services that Chandler provides, including full time
investment advisory and portfolio management services, technological resources, onboarding and
implementation, online access to the Chandler Client Portal, comprehensive reporting, meetings,
personal visits, educational offerings for your staff, as well as the additional treasury support services
described herein in Chandler’s proposal. Chandler does not charge fees on funds held in Local
Government Investment Pools. Fees are firm for the entire initial contract term and the City will not be
subject to any increases during this period.
Our fee schedule does not include charges that the City would incur for third-party custodial services,
which, as an important control in the investment process, is not provided by Chandler.
Examples of the fees assessed to the City at different asset levels according to the above proposed tiered
fee schedule are as follows:
Total Assets Under
Management
Annual Fee in Basis
Points
Annual Fee in $
dollars
$240 million 5.94 bps $142,500
$275 million 5.82 bps $160,000
$300 million 5.75 bps $172,500
Fees are based on the amount of assets under management and are not based on transaction volume.
Management fees will accrue as long as there are assets in the portfolio, even if there is no activity during
the period. Since the firm calculates fees based on the average balance of assets under our direct
management (market value including accrued interest), they will fluctuate based on portfolio value. The
examples above are based on sample account sizes and should not be considered a “not to exceed” fee.
Fees are charged monthly in arrears and can be debited directly from your third-party custody account.
b. Identify any expenses that would not be covered through this fee structure and would be required in
order to implement the firm’s program.
Our proposed fee schedule is all-inclusive for the services that Chandler provides, including meetings,
personal visits, and educational offerings for your staff, as well as investment management services
described in the City’s Scope of Services. Our fee schedule does not include charges that the City would
incur for third-party custodial services.
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c. Please provide a statement of fees for such additional services as arbitrage rebate, or other related
services.
As an SEC-registered investment adviser and in accordance with California Government Code 53600.3,
Chandler shares your fiduciary duty and holds itself to the highest standards, aiming to safeguard
principal and maintain the liquidity needs of the City as primary objectives. Chandler acts in accordance
with prudent investor standards, avoiding conflicts of interest and putting clients’ needs first in all
matters and responsibilities related to the investment management services we provide. There are no
extra fees associated with arbitrage rebates or other related services.
Our reports provide all information necessary to perform arbitrage calculations and develop the
arbitrage compliance reports, and our fee schedule is comprehensive for all services we will provide to
the City.
d. Describe your firm’s compensation policies for investment professionals.
Chandler has a comprehensive compensation policy for our investment professionals designed to be
aligned with the interests of our clients. This policy includes incentives based on individual contributions
to our clients’ success, as well as efforts towards building an enduring firm with a long-term culture of
shared success, rather than utilizing performance-based compensation. Individual base salaries are
competitive, and commensurate with experience, education, and roles and responsibilities.
Furthermore, all employees participate in the firm’s Employee Stock Option Plan (“ESOP”) and have a
proportionate share in the ownership of the firm.
Chandler’s senior leadership team receives competitive base salaries, as well as annual discretionary
bonuses based on individual contributions to the firm’s overall success. Key principals of the firm are
also majority owners and have a proportionate share in the firm that is greater than the employee
participation share of the ESOP Trust.
5. ASSETS UNDER MANAGEMENT
a. Summarize your institutional investment management asset totals by category for your latest
reporting period in the following table:
Institutional Assets under Management
As of December 31, 2021
Operating Funds Other Funds
Governmental $ 20,597,421,147 $ 223,730,510
Other Institutional $ 2,116,111,368 $ 143,363,362
b. Provide the number of separate accounts whose portfolios consist of operating funds.
Chandler has a total of 184 client relationships whose portfolios consist of operating funds.
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c. List in the following table the percentage by market value of aggregate assets under management for
your latest reporting period:
Type of Assets Percent by Market Value
U.S. Treasury securities 33%
Federal Agency obligations 22%
Corporate securities rated AAA-AA 5%
Corporate securities rated A 12%
Corporate securities rated BBB or lower 2%
Other 26%
“Other” include Commercial Paper (CP), Municipal Bonds, Mortgage-Backed Securities (MBS), Asset
Backed Securities (ABS), Collateralized Mortgage Obligations (CMOs), Negotiable CDs, and Time
Deposits. Supranationals and equity mutual funds, also included in “Other”, are held only in accounts
not subject to California State law governing the investment of public funds.
d. Describe the procedures that your firm has in place to address the potential or actual credit
downgrade of an issuer and to disclose and advise a client of the situation.
Chandler employs a proprietary credit research process with the objective of identifying stable and
improving credits to include in client portfolios. To enhance our internal processes, Chandler utilizes
several external research providers including CreditSights, Egan-Jones, BCA Research, Stone and
McCarthy, and ITR Economics. However, in all cases, the decision as to whether to include a security in
client portfolios is based on the internal, proprietary evaluation of the particular issuer. Each sector and
issuer is reviewed a minimum of once per quarter or four times per year. The goal is to be proactive in
identifying and investing in stable and improving credits, and in avoiding deteriorating credits.
In addition to the formal Credit Committee meetings, all credits are monitored continuously. The Credit
Committee monitors the overall news flow on each issuer on our approved list (i.e. earnings, press
releases, management presentations or conferences, rating changes, etc.). The gathered information is
distributed to the entire investment management team on a daily basis. In the event the fundamentals
of the underlying security change, the Credit Committee may act to add or remove the issuer from our
approved credit list or move it within the appropriate tier.
• A core philosophy for the Chandler team is transparency and client communication. The Chandler
team meets frequently with our clients, either in person or remotely in the COVID environment, to
provide updates on our economic outlook, the current positioning of the portfolio, as well as likely
changes to the portfolio asset allocation, portfolio structure and individual security holdings in the
coming quarters based on our overall outlook.
• We take an active approach in highlighting to our client’s securities are more likely to be utilized as
a ‘source of funds’ for rebalancing transactions based on changing credit fundamentals, risks not well
understood by the majority of market participants, as well as credit quality and maturity.
• In the event a security is no longer deemed suitable and consistent with the credit quality objectives
of the underlying portfolio, the Chandler team takes a tactical approach to exiting the position.
Depending on market conditions and our overall outlook for the security, this may entail selling the
security immediately, dollar cost averaging out of our exposure over several weeks, or choosing to
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hold the position if the maturity is very short or a corporate action (i.e., make whole call) is likely in
our judgment.
Please see page 17 to review Chandler’s credit analysis and security selection process.
e. Provide data on account/asset growth over the past three years. Indicate the number of
accounts gained and the number of accounts lost.
For the most recent 12-month period ending December 31, 2021, Chandler gained twenty-seven (27)
institutional clients totaling approximately $1.5 billion. During the same period, Chandler lost six (6)
institutional clients. Clients have discontinued services provided by Chandler for various reasons,
including budgetary constraints, spending down investable assets, or internal changes in finance
administration/staff. Notably, Chandler has never had a client discontinue service for convenience or for
cause.
Year Ending
December 31 Institutional Assets
Accounts
Gained
Accounts
Lost
2021 $ 25,281,592,317 27 6
2020 $ 21,764,713,385 15 0
2019 $ 19,056,525,771 10 3
handler’s institutional assets under management for the past five years and the current year (2019-12/31/2021). Includes
both discretionary and non-discretionary assets. Advised assets are excluded.
f. Provide a copy of the firm’s most recent Form ADV, Parts I and II (including all schedules).
Please find the firm’s most recent Form ADV, Parts I and II enclosed in the Appendix.
6. INVESTMENT MANAGEMENT DISCIPLINE AND APPROACH
a. Describe your firm’s investment philosophy for public clients, including your firm’s philosophy
regarding average duration, maturity, investment types, credit quality, and yield. How would you
apply your philosophy to the City of Dublin’s portfolio?
We believe that through effective risk management, we can enhance the potential for higher total
returns for risk-conscious clients while maintaining their shared primary objectives of safety and
liquidity. Our approach utilizes investment processes and strategies we have developed over three
decades, and focuses on:
$19.1 $21.8
$25.3
$-
$5
$10
$15
$20
$25
$30
2019 2020 2021
Chandler's Institutional AUM ($ billions)
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• Safety of principal 1;
• Appropriate levels of liquidity;
• Diversification of risk;
• Compliance with policies, legal requirements, and risk/return objectives; and
• Active management to generate investment income and total return.
We implement this philosophy by structuring investment portfolios with the goal of achieving
performance that consistently exceeds the returns of a selected market benchmark over a market cycle,
while always maintaining each client’s tolerance for risk. We reduce exposure to market risk by
diversifying the portfolio by sector, credit quality, maturity, issuer, and security type, and by establishing
and maintaining a target portfolio duration that is consistent with the investment objectives.
Chandler’s singular focus stems from the investment philosophy of our clients that prioritizes safety and
liquidity above chasing returns that may put their principal at increased risk. As a result of this focus, we
take a conservative approach regarding all aspects of the investment and portfolio management process.
Our methods for developing the investment objectives and constraints for our clients is customized after
an extensive review and thorough understanding of the investment policy, risk tolerances, as well as the
current and expected mandates of the client’s specially purposed funds.
b. What are your primary strategies for adding value to portfolios (e.g., market timing, credit
research, trading)?
Chandler’s pro-active portfolio management, diligent security analysis, and prudent attention to cash
flow needs add value to client portfolios and enhance the consistent returns generated over time. Our
approach to structuring the portfolios is designed to fulfill the City’s requirements in a way that
addresses specific investment needs, and focuses on the following key elements:
• Duration Management — We strive to maintain duration (the portfolio’s price sensitivity to
changes in interest rates) within a defined range that reflects the City’s return requirements and
acceptable volatility as indicated by a benchmark that reflects the risk parameters and expected return.
Duration is the largest determinant of risk and return. We attempt to minimize the impact of the
duration decision on return volatility by limiting duration to within a +/- 20% duration band around the
target (benchmark) duration. We have observed that longer-duration portfolios have historically
outperformed shorter duration portfolios over long-term investment horizons. We will work with the
City to identify an appropriate duration target that takes advantage of longer maturity investments with
higher yields while limiting volatility and providing for needed liquidity.
An optimal term structure is based on our proprietary analysis and a probability-weighted forward-
looking forecast of various interest rate scenarios that may occur at the six- to twelve-month horizon
date.
• Sector Allocation— Our sector allocation process is based on the belief that portfolios are more
robust and prepared for unforeseen events if they have a well-diversified exposure to high quality fixed
income securities. Using the output of the Sector Committee, we will determine the allocation to asset
11 While our conservative investment approach promotes safety, investing in securities carries varying degrees of risk and we cannot
guarantee safety of principal.
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classes that we believe will provide the best economic opportunities and protection for the portfolio.
We can add considerable value through rotating sectors as market conditions evolve and our outlook
changes, thus identifying best relative value at time of purchase in order to capitalize on current market
opportunities.
• Term Structure— Utilizing the output from the Economic and Market Analysis Committee in
conjunction with the Horizon Analysis Model, the term structure for the portfolio is determined with the
objective of finding a structure that prioritizes the protection of the portfolio and performs well under
both anticipated and unanticipated yield curve shifts over a six-month horizon. Given the constantly
evolving market dynamics and changing interest rates, the portfolio may have a "laddered" structure,
with equal allocations across permitted maturities; a "barbell" structure, with maturities concentrated
in short and long maturities; a "bullet" structure, with maturities concentrated around the target
duration. As interest rates evolve, the Chandler team alters the maturity distribution of the portfolio
based on the prevailing market conditions.
• Security Selection— Once the team has determined the percentage of the portfolio in any
duration range or security type, individual securities are purchased to complete the portfolio structure.
Chandler’s investment team closely follows trends in the new issue market to take advantage of the
cyclical swings in issuance in order to obtain attractive spreads over the risk-free Treasury rate. The
seasoned professionals at Chandler are also well versed in the technical differences between various
names in the investment universe, and frequently adjust the underlying name and sector exposure to
take advantage of market anomalies only a skilled investor can consistently identify. Securities are
subjected to a rigorous review process, including fundamental credit analysis, as well as quantitative
analysis using proprietary tools. Our investment professionals recommend securities from an Approved
Issuer List based on relative value considerations. In addition, our Credit Committee seeks to identify
both improving and deteriorating credits so we can work to reposition client portfolios by seeking
favorable and avoiding detrimental factors not yet understood by the majority of market participants.
Analyzing the credit worthiness of individual issuers to enhance portfolio yields while minimizing
exposure to credit and downgrade risk is a key element in mitigating risk and adding value in our clients’
portfolios.
• Active Management of Individual Securities - To maintain the optimal structure and the
objective of safety of principal and risk-adjusted returns over a market cycle, Chandler utilizes active
management of the investment portfolio. With this approach, a security may be sold or replaced prior
to maturity to take advantage of market conditions, generate liquidity, mitigate risk, or to enhance the
return of the portfolio. We are also able to take advantage of the repricing into the current higher
interest rate environment. The net economic benefit to the City is the sole consideration for
purchasing/swapping/selling securities for the portfolio.
• Competitive Execution. We recognize our duty to provide value to our clients and ensure the
quality of our services as a fiduciary. The City’s staff is assured that through Chandler’s best execution
practices, it is receiving competitive, institutional pricing on transactions, as the firm seeks a minimum
of three quotes per trade. The practice of competitively bidding for transactions results in an incremental
net financial advantage for our clients over time and is an additional source of value in retaining Chandler
as investment manager. This competitive process can be evidenced on daily trade tickets viewable on
the Chandler Client Portal.
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c. Describe the process you would recommend for establishing the investment objectives and
constraints for this account.
The Chandler team has designed the entire investment process, from the selection of benchmarks
through portfolio construction and security selection, to promote the City’s objectives of safety, liquidity,
and return. The first step is identifying the City’s specific objectives, both qualitative and quantitative,
for safety, liquidity, and return. Our approach to structuring the portfolio is designed to fulfill those
requirements in a customized way.
Safety - Our strategies add value in a framework of risk management throughout the investment process
including the establishment of specific client objectives, purchasing individual securities, and the
reinvestment of maturing securities. Our focus on managing downside risk is equally as important as our
focus on an investment’s upside potential and proves especially valuable for protecting our clients’
principal in a rising interest rate environment. We work to execute the investment approach by
performing daily analysis of market conditions to identify opportunities and risks, and by conducting in-
depth credit analysis through our successful credit review process to protect your funds from
downgrades and potential losses because of the financial impairment of issuers.
In addition, the inclusion of high-quality US Treasury and federal agency securities, along with broad
diversification by issuer, promote the objective of safety in the portfolio.2
Liquidity - We understand that second to safety, access to cash is the highest priority for a public
investment program and the portfolio must be optimally structured to provide for both anticipated as
well as unanticipated cash needs. We will assist the City to develop and maintain cash flow forecasts and
managing liquidity. Liquidity is embedded into the portfolio structure using short-term credit
instruments that mature on known cash flow dates, providing sufficient funds for net cash
disbursements over the ensuing six to twelve months. Generally, all securities in the portfolio are highly
liquid and available for sale, in case of any unexpected or immediate cash distribution. All securities will
be held in the City’s name in the custody of a third-party bank for efficient access.
Return - Yield, the third objective, is of less importance than safety and liquidity; nevertheless, we search
diligently to add value at every stage in our process. Our approach is to purposefully segment the
portfolio into two components—liquidity and reserve. The liquidity portfolio is customized to provide
funds for disbursements as needed, in accordance with the client’s direction to us. We manage the
reserve portfolio, consisting of funds not currently needed for cash flow, to enhance expected earnings
and long-term growth within the constraints of the client’s risk profile and return objectives. Finally, we
strive to find the best execution for each transaction, seeking multiple price quotations on all purchases
and sales, adding to incremental earnings for the portfolio over time.
d. Do you have or would you recommend there be policy restrictions with respect to maturity,
sector, quality, and coupon? Please describe your firm’s decision-making process.
Chandler has the following recommendations with respect to maturity, sector, quality, and coupon.
Maturity
We believe the average maturity of each separate portfolio, as well as the longest permitted maturity,
should reflect the client’s goals, return objectives, and risk tolerances. We see our first task with a new
client as understanding the client’s specific objectives for its funds, which may include specially purposed
2 While our conservative investment approach promotes safety, investing in securities carries varying degrees of risk and we cannot
guarantee safety of principal.
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funds such as capital projects, bond proceeds, and debt service reserves. Each separate account may
require its own investment strategy, which, in aggregate, will contribute to an optimal investment
program that meets the entity’s needs. When that understanding is achieved, we establish a target
maturity and duration for each account under our management.
Sector
We recommend having the broadest allowable Policy language regarding sector allocation, within which
the adviser can employ to select the optimal sector distribution, given the circumstances at the time of
investment. Further, we believe in “sector rotation,” defined as changing the sector allocation over time
as the value of various sectors rises and falls.
Credit Quality
We employ a rigorous credit analysis process that helps us identify investment opportunities in securities
that are appropriate for the prudent investment of public funds. Our investment professionals
recommend securities from an Approved Issuer List based on internal research, fundamental analysis,
and relative value considerations. Moreover, we believe that each client should establish credit quality
constraints that reflect the risk preferences of stakeholders, and these constraints may be more
conservative than state legal requirements that govern investments. Within that framework, we will
purchase securities that our credit and value analyses have identified as being appropriate for the City’s
portfolio and have relative value.
Sector Allocation
Our sector allocation process is based on the belief that portfolios are more robust and prepared for
unforeseen events if they have a well-diversified exposure to high quality fixed income securities. Using
the output of the Sector Committee, we will determine the allocation to asset classes that we believe
will provide the best economic opportunities and protection for the portfolio. We are able to add
considerable value through rotating sectors as market conditions evolve and our outlook changes, thus
identifying best relative value at time of purchase in order to capitalize on current market opportunities.
Decision-Making Process
Horizon Analysis Model and credit review/security selection provide a quantitative foundation for
Chandler’s portfolio construction process. In addition, the investment management team subscribes to
a variety of private research providers including BCA Research, Oxford Economics, Egan Jones, and
CreditSights to augment the overall research efforts of the firm. The team keeps abreast of sell-side
research from a broad group of domestic and international investment banks. These tools not only
provide data for our investment processes but ensure that our clients have access to the most current
and relevant market information. Chandler’s professionals also conduct research projects on an ad hoc
basis on issues concerning our industry and our clients, such as changes in the brokerage world, studies
on how legislative changes impact our clients, and research on new sectors or investment structures as
appropriate for our clients’ portfolios.
Proprietary Tools and Best-in-Class Resources for Portfolio Constructions
Chandler’s proprietary Horizon Analysis Model is the quantitative foundation for the portfolio
construction process. The model enables our portfolio management team to integrate their research
into the portfolio management process in a disciplined and repeatable way. Inputs to the model include:
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1. Current yields on Treasury, agency, and corporate securities
2. Specific client constraints, such as maturity restrictions and maximum sector exposure; and
3. Nine different probability-weighted forecasted interest rate scenarios that may occur at the six-
month horizon date. Our analysis of current macroeconomic conditions is one of the factors we
consider as we develop the nine scenarios that comprise the third input to the model.
Chandler’s Investment Process
Through an iterative process, the model generates the “optimal portfolio structure” (duration, maturity
distribution, and sector allocation), which we define as the portfolio that achieves a return greater than
the benchmark in each of the nine scenarios. That is, the model generates a portfolio structure that we
expect will outperform the portfolio’s benchmark over a wide range of possible future interest rate
movements. The Investment Team then evaluates the optimal portfolio structure and using their
expertise and judgement, may make adjustments as they begin the construction of the portfolio. This
combination of a rigorous quantitative structure and experienced qualitative oversight is a hallmark of
all Chandler’s portfolio management activities.
Periodic Rebalancing – With the passage of time, portfolio characteristics tend to drift away from the
desired structure. For that reason, the team reruns the Horizon Analysis Model monthly reevaluates the
optimal portfolio structure and rebalances to obtain the desired sector allocation and duration target as
market conditions change. In addition, the benchmarks used by our clients for performance
measurement are reconstituted monthly; therefore, we realign our portfolios with these benchmarks.
As part of our active management approach, we will also rebalance when we find securities of superior
value in terms of expected return or reduced risk or to adjust the credit quality of a holding for the
portfolio.
e. Describe in detail your process of credit risk management, including how you analyze credit
quality, monitor credits on an ongoing basis, and how you would report credit to the City.
Credit Analysis and Security Selection
Chandler conducts credit research in a team environment comprised of investment professionals as part
of the firm’s Credit Committee. William Dennehy, CFA, Co-CIO and is the chair of the Credit Committee
which also includes additional members of the investment team. The firm’s proprietary credit research
process identifies stable and improving credits to include in client portfolios. Although the Nationally
Recognized Statistical Rating Organizations (“NRSROs”) typically determine the initial eligibility of a
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security, Chandler does not rely on these ratings to determine whether a security is suitable for a
Chandler portfolio. Chandler’s Credit Committee, with input from the entire investment team further
vets the suitability of an investment based on our own internal research and a thorough understanding
of each client’s investment objectives and risk tolerances. This combination of qualitative and
quantitative analysis enables the team to identify and invest in securities consistent with our clients’
objectives of safety 3, liquidity, and return.
The dynamic nature of the process also provides the team with the ability to detect weak and
deteriorating credits, which may be removed from client portfolios and Chandler’s Approved Issuer List.
In determining the suitability of a security, the Credit Committee analyzes company fundamentals with
a focus on relative balance sheet strength and the overall earnings outlook of the issuer, paired with
Chandler’s view of the forward-looking macro-economic environment. After the fundamental outlook of
an issuer has been ascertained, the Credit Committee focuses on the relative value of current and
historical spreads of both the issuer and its industry sector. Chandler’s internal credit process is designed
to identify and evaluate changing fundamentals and the current relative value of issuers versus sector
peers.
The Credit Committee meets regularly to rank corporate issuers into three tiers and categorizes those
securities based on individual client risk tolerance and policy guidelines. Each sector and issuer is
reviewed at a minimum of once per quarter, or four times per year. The goal is to be proactive in
identifying and investing in stable and improving credits, and in avoiding deteriorating credits.
Chandler’s Credit Review Process
In addition to the formal Credit Committee meetings, all credits are monitored on a continuous basis.
The Credit Committee monitors the overall news flow on each issuer on our approved list (i.e. earnings,
press releases, management presentations or conferences, ratings changes, etc.). The gathered
information is distributed to the entire investment management team daily. In the event the
fundamentals of the underlying security change, the Credit Committee may act to add or remove the
issuer from our approved credit list or move it within the appropriate tier.
3 While our conservative investment approach promotes safety, investing in securities carries varying degrees of risk and we cannot
guarantee safety of principal.
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f. Describe your firm’s trading methodology.
Chandler will execute approved securities transactions on a transparent and highly competitive basis, in
accordance with our commitment to best execution. As part of this process, we seek a broad range of
security trading partners that provide a high level of market liquidity and product inventory. A minimum
of three quotations is sought and documented on trade tickets and are reported to clients at the time of
execution. The winning seller delivers securities directly to your custodian bank, using standard delivery-
versus-payment procedures.
In seeking best execution, we “block” trades for a number of clients, where possible, and then allocate
the trades to individual portfolios, using an allocation process designed to treat all clients fairly in the
transaction. We execute transactions through online trading platforms, such as Bloomberg and
MarketAxess, or directly through individual brokers with the goal of seeking competitive executions.
g. Describe your research capabilities as they would pertain to the City’s portfolio. What types of
technical analysis do you use?
Chandler devotes considerable resources to enhancing our own in-house capabilities and evaluating
research from outside sources, which we incorporate into our own proprietary processes. Aided by
inputs from the different investment committees, decisions are made by the investment team regarding
duration positioning, sector allocation, term structure, and issue selection within the firm’s macro view
of the economic environment and broad-based view on interest rates and leading economic indicators.
The investment team then incorporates these decisions as they apply to each individual portfolio. As our
primary focus is on the management of fixed income securities for public agencies, the firm’s analytical
rigor is dedicated to the investment types we purchase on behalf of our clients – US Treasuries, Federal
Agencies, corporate bonds, commercial paper, negotiable CDs, and asset-backed/mortgage-backed
securities, as well as the value identified between sectors and individual issuers.
Chandler conducts 100% of its research in-house. Internally developed, proprietary tools such as our
Horizon Analysis Model and credit review/security selection provide a quantitative foundation for
Chandler’s portfolio construction process. In addition, the investment management team subscribes to
a variety of private research providers including BCA Research, Oxford Economics, Egan Jones, and
CreditSights to augment the overall research efforts of the firm. The team keeps abreast of sell-side
research from a broad group of domestic and international investment banks. These tools not only
provide data for our investment processes but ensure that our clients have access to the most current
and relevant market information. Chandler’s professionals also conduct research projects on an ad hoc
basis on issues concerning our industry and our clients, such as changes in the brokerage world, studies
on how legislative changes impact our clients, and research on new sectors or investment structures as
appropriate for our clients’ portfolios.
In addition to our internal research tools and capabilities, the following external systems and software
support our trading, portfolio accounting and client reporting:
a. PAM for Securities Accounting system (Princeton Financial Systems)- Main source of
record where all portfolio transactions are stored. Holdings information are based on the
transactions entered. Also stores SMF records, pricing, ratings, performance calculations,
and other supporting data.
b. SQL Database- Stores enterprise operational data such as account information,
reporting/configuration, credit/index information, etc. Also stores copies of PAM data.
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Main source of information for 95% of our reporting. Remaining information comes from
PAM, Access, or Bloomberg AIM reports.
c. SQL Reporting/Report Manager- Main application that creates, automates reports, and
displays reports.
d. Bloomberg AIM - Order Management System. Imports holdings information from PAM
and sends trading transactions to PAM. Also gets trade ticketing information, allocations,
OASYS, settlement instructions enrichment. Compliance system used for pre-trade, post-
trade, and end-of-day compliance testing and straight-through processing of investment
transactions.
e. Bloomberg AIM - Investment Manager. The Bloomberg AIM system provides seamless
data integration that compliance, as well as post-trade automation such as trade and
security master file (SMF) data automatically sent to our accounting system. Its
compliance monitoring features will calculate and monitor asset class exposure, as well
as issuer size and concentration limits, as well as compliance with the City’s investment
guidelines and legal requirements.
Effects of Security Purchases/Sales. Bloomberg AIM also allows the portfolio manager to
test the effects that new securities will have on an existing portfolio. For example, the
team can propose a trade in Bloomberg AIM, and determine what impact the position will
have on the portfolio’s overall duration. In addition, we can perform an analysis on how
a portfolio will be affected given a specified change in interest rates to ensure the
portfolio will continue to meet the objectives of the portfolio. We also can see the impact
of security transactions on the portfolio not only from a portfolio management standpoint
but also the implications to the accounting such as the gain/loss of a security sale.
f. Electra Reconciliation System and Data Retrieval Services – Custodian to PAM
reconciliation system. Gathers and consolidates bank and manager data each
night/morning, as it becomes available.
g. OASYS- Product by OMGEO that communicates trade allocations to other participating
OASYS brokers.
h. Confirm/Affirm- Product by OMGEO where the details of trades are communicated
between the broker and Chandler to achieve settlement. This helps streamline
settlements and notifies parties when trades details do not match.
i. Salesforce CRM – Contact management, portfolio settings, report distribution settings.
The City is not required to purchase any additional programs or software that is utilized for services
under this engagement, relieving the need for to allocate capital for portfolio optimization, policy
compliance, financial reporting, and other crucial aspects of managing your funds.
h. Describe the firm’s approach to managing relationships with the broker-dealer community.
The Investment Management Team maintains an active, productive relationship with the broker/dealer
community in order to promote an ongoing flow of market information and to execute trades for our
clients at competitive prices. On a given day, various factors may combine to generate the best price for
a given transaction, including current dealer inventories, dealer profit/loss positions, and individual
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dealer sentiments about the market. No one dealer will consistently provide best execution. For that
reason, we consistently place several dealers in competition and continuously monitor and compare
inventories and prices.
Given that all of our transactions are executed using “delivery-versus-payment” (DVP) procedures, the
firm’s broker/dealer selection and retention process centers primarily on transactional risk. Thus, our
internal criteria for reviewing and monitoring broker/dealers for approval and retention include:
1. Competitive pricing
2. Trade execution efficiency
3. Consistency of coverage
4. Quality and breadth of product inventory
5. Willingness to make a two-way market
We monitor financial news for any indication of financial weakness or diminishing participation in our
markets. In addition, we are concerned with broker/dealer integrity and capitalization. The Financial
Industry Regulatory Authority (FINRA) provides an on-line BrokerCheck System, which we use to review
the credentials and regulatory background of each broker/dealer firm and the employees with whom
we trade.
7. PORTFOLIO MANAGEMENT
a. Are portfolios managed by teams or one individual?
Chandler manages portfolios in a team environment ensuring that all investment team members and client
service personnel are familiar with your portfolio. This team approach ensures that there will always be
professionals available who are knowledgeable about your portfolio management needs and provide
continuity of the investment program. The City will have direct face-to-face, phone and email interactions
with the portfolio managers in addition to the rest of the investment management team. Successful
implementation of the firm’s investment process is not dependent upon any one individual, as all of our
portfolio managers have research, trading and management responsibilities, which benefit all of our
client accounts. In addition, our client service personnel are adept at handling the non-investment needs
of the engagement and will escalate any issues and route them through the correct channels, if necessary.
b. What is the average number of accounts handled per manager?
Chandler manages portfolios in a team environment ensuring that all investment team members are
familiar with your portfolio. There will always be professionals available who are knowledgeable about
your portfolio management needs, during and after market hours. The City will have direct face-to-face,
phone and email interactions with the portfolio managers in addition to the rest of the Investment
Management team. As of December 31, 2021, the investment team managed an average of 25 accounts
per team member. We have a comprehensive plan in place to add staff members as we add assets under
management. Our goal is to maintain the high level of performance and service that is one of the
hallmarks of our firm.
Professional Biographies for Chandler’s professionals are included in the Appendix.
c. Which professional staff member will be the primary client contact for the City?
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The primary contact for the City of Dublin engagement will be l Neil Murthy, Relationship Manager,
located in our Walnut Creek offices. Chandler has been a California-headquartered firm since our
inception, and all investment management, operations, compliance, and executive administrative
functions will be performed at the firm’s corporate headquarters in Southern California.
William Dennehy, CFA
Co-CIO
6225 Lusk Boulevard
San Diego, California 92121
Direct: 858.888.5087
wdennehy@chandlerasset.com
Neil Murthy
Relationship Manager
2121 North California Boulevard,
Suite 290
Walnut Creek, California 94596
Direct: 858.245.4869
amurthy@chandlerasset.com
Chandler Asset Management
Toll-Free: 800.317.4747
info@chandlerasset.com
www.chandlerasset.com
d. How frequently do you recommend meeting with us?
Chandler will continue to communicate proactively with the City, including attending investment
meetings with your finance staff, City Manager, and Council, as well as offering availability for any
additional matters by phone or in person.
We have developed a regular schedule of outreach and in-person client meetings that we design to meet
your preferences. At the formal meetings, we prepare presentations, which include market information,
current and proposed investment strategies, portfolio characteristics, performance, and expectations
for the coming quarter. This format is designed to promote discussion between our team and your staff.
Members of the investment management team as well as your relationship manager regularly attend
these meetings. The City has become familiar with several of Chandler’s professionals, both in an
investment management capacity as well as part of its client service delivery. Chandler’s professionals
excel at the type of communication required to provide full transparency of your investment portfolio,
assisting with translating the details of the entire investment program efficiently and effectively to the
board, committees, and the public at large.
In addition, we will continue to communicate regularly via email to our clients with updates which
include:
• Weekly economic updates provide a concise summary of economic and market news of the
current week, key economic indicators, as well as topics for the next weeks’ economic data
releases. The update is sent via email to clients and interested parties each Friday;
• Monthly newsletter that includes a market summary, treasury yield curve graph and monthly
percent changes, as well as economic data and statistics; and
• Ad hoc emails and communication such as Fed rate news, education pieces, white papers,
technology, and product updates.
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• We are available for consultation for members of the City Council to discuss any area of the City’s
investment program or current market conditions.
e. Describe procedures used to ensure that portfolios comply with client investment objectives,
policies, and bond resolutions.
Chandler uses robust order management (“OS”) and portfolio compliance software from Bloomberg
AIM for ensuring compliance with client objectives, policies and legal requirements on a pre-trade, post-
trade and end-of-day basis. At the inception of an engagement, a compliance officer codes each element
of the investment policy and guidelines into the Bloomberg system. Since each trade originates in the
system, pre-trade compliance testing is generated each time a portfolio manager prepares to execute a
transaction. The system prohibits execution of the trade if it does not comply with your investment
policy. If an “alert” is triggered for non-compliance, it cannot be overridden by an investment manager,
and is escalated for review by compliance professionals.
Oversight of portfolio compliance and trade order management is conducted by Chandler’s dedicated
Compliance Department, headed by Chief Compliance Officer Joseph Kolinsky, and which functions
separately from the portfolio management team under the appropriate segregation of duties. As a part
of our regular process of policy and guideline monitoring, we provide clients with a monthly detailed
Statement of Compliance, based on our complete review of our clients’ investments. This report details
adherence to requirements such as permitted investments, minimum credit quality, maximum
maturities, and concentration limits. This Statement also serves as an effective means of reporting
compliance to the governing body.
In the event of a compliance violation, the details and actions taken to correct the violation would be
detailed in this report.
Further procedures to ensure compliance with state laws, your investment policy, objectives, and
directives include:
• A daily reconciliation of transactions and cash balances with custodian information.
• A month-end review of the portfolio to confirm compliance with the Investment Policy.
• A comprehensive weekly process to ensure credit quality meets your policy standards as well as
our strict quality requirements.
• A portfolio structure that satisfies liquidity objectives with short-maturity securities and return
objectives with higher duration investments.
• Frequent communication between our team and yours to help us stay informed of any new
developments that may modify your objectives.
• Meetings with your staff as frequently as you choose to provide additional opportunities to
review portfolio composition and performance at a high level.
Through Bloomberg AIM’s integration, Chandler optimizes its workflow automation and improves
synchronicity with our clients’ internal accounting and portfolio management systems for more
centralized and efficient operations. The Bloomberg AIM system provides seamless data integration that
improves trading and compliance, as well as post-trade automation such as trade and security master
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file (SMF) data automatically sent to our accounting system. Its compliance monitoring features
calculates and monitors asset class exposure, as well as issuer size and concentration limits, as well as
compliance with the City’s investment guidelines and legal requirements.
8. PORTFOLIO REPORTING
a. Please describe how you typically report performance.
Reports will be prepared in accordance with state law and the Governmental Accounting Standards
Board (GASB), and are compiled to meet your specific needs. Chandler Asset Management claims
compliance with the Global Investment Performance Standards (GIPS®), and prepares and presents its
performance in compliance with these standards. Chandler is independently verified by ACA
Performance Services for firm-wide GIPS® compliance.
Chandler utilizes the software of PAM for Investments, a State Street Company to perform investment
accounting and reporting. Using PAM as the investment book of record for our clients, we generate
comprehensive monthly statements and performance reports, which clients receive no later than the
third business day following month-end.
Chandler measures portfolio performance monthly and quarterly on a total return basis, providing a
complete snapshot of the outcomes resulting from investment decisions since total return measures the
percent change in the value of a portfolio over a defined historical period. The total return of the
portfolio is compared to carefully selected benchmarks which have been selected in collaboration with
clients as the appropriate metric for assessing performance relative to their risk tolerances and
investment objectives.
Our standard reports currently include purchase yields and portfolio total rate of return compared to
the benchmark return for periods of one month, the most recent quarter, year to date, one year, three
years, five years, ten years and since inception.
To ensure integrity, we receive daily pricing of securities from Interactive Data Corporation, Inc. (IDC). In
the rare instance that a security is not priced by IDC, we use an alternative pricing source, such as TRACE,
Bloomberg, custodian valuation, etc., to determine reasonable fair market value. Our operations team
also performs daily reconciliation of transactions and cash balances with our clients’ custodians.
b. Please provide performance history for the past five years for current accounts comprised of
securities with maturities, quality, and sectors similar to those of City of Dublin. Indicate whether your
returns are calculated and compiled in accordance with the Global Investment Performance
Standards. If not, how does the performance presentation differ?
Chandler develops and implements portfolio strategies that are tailored to meet the exact needs of each
client. Portfolios with similar characteristics are grouped into composites for the purpose of computing
and reporting GIPS-compliant performance results.
The following table presents returns on the Short Term Chandler composite that is currently utilized for
the City for the one-, three-, five-, and ten-year periods ending December 31, 2022.
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Chandler Composite Performance – Gross and Net of Fees
As of December 31, 2021
One
Year
Three
Years
Five
Years
Ten
Years
Since
Inception
Chandler Short Term Bond (gross)
(inception: 9/30/95) -0.93% 2.65% 2.11% 1.62% 3.89%
Chandler Short Term Bond (net) -0.87% 2.59% 2.05% 1.56% 3.83%
ICE BofA 1-5 Year US Treasury
& Agency Index -1.099% 2.41% 1.89% 1.35% 3.62%
Based on Chandler’s Short Term Bond composite as of 12/31/2021. Performance results are presented gross and net of fees. Net returns
are 6 basis points (0.06 of 1%) proposed for a $240 million portfolio and are hypothetical and not based on an actual client's account.
The performance has been calculated using historical composite performance. Gross performance does not reflect payment of advisory
fees and other expenses which will reduce performance. Past performance is not a guarantee of future results. All investment strategies
have the potential for profit or loss. Market conditions or economic factors may alter the performance and results of a portfolio.
Investment advisory fees are disclosed in the firm's form ADV, Part 2A. Performance for periods greater than one year is annualized.
Please see GIPS Composite Reports in the Appendix. For one-on-one presentation only.
Chandler develops and implements portfolio strategies that we tailor to meet the needs of public agency
clients. We group portfolios with similar characteristics into composites for the purpose of computing
and reporting GIPS®-compliant total return performance results. GIPS® represent an industry-wide
standard for performance calculation and reporting which facilitates comparison among investment
firms. Chandler Asset Management claims compliance with the Global Investment Performance
Standards (GIPS®). Chandler is independently verified by ACA Performance Services for firm-wide GIPS®
compliance. A copy of the firm’s most recent GIPS® Verification Letter is included in the Appendix.
c. Do your reports conform to State reporting standards? Are you willing to customize your
reports to meet our specifications?
We can provide comprehensive reporting that will be tailored to meet the City’s unique needs, as well
as meet the demand of the marketplace. While our performance measurement software and data
sources are from outside vendors, our reporting capabilities are based on a proprietary reporting tool,
and so we can customize reports for our clients.
The reports that Chandler provides to you will provide transparency of your portfolio, and will assist your
staff with their accounting duties, alleviating and even eliminating intermediary steps required to
compile internal reports. We can provide comprehensive reporting that is tailored to meet the City’s
unique needs, as well as meet the competitive demand of the marketplace.
Online Client Portal: Chandler’s Client Portal is the custom computer-based analytical tool that provides
clients with secure access to a variety of digital files, including customized reports, trade tickets, and
documents, as well as the ability to download daily transactions and holdings, historical monthly
statements, and quarterly reports. The Portal offers online access, and is also designed to be viewed on
mobile devices. Reports can be downloaded in Excel format and easily mapped and integrated into your
internal reporting requirements, aggregating your data for effective analysis and improving your
operational efficiencies. Access to the Chandler Client Portal is available to individual contacts selected
by the client, and is accessible 24 hours a day, 7 days a week.
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Monthly Statements: We provide monthly portfolio accounting and performance statements as part of
our regular services. Each monthly statement begins with a one-page management summary of portfolio
characteristics that provides a thorough overview of the portfolio, including performance relative to the
selected benchmark(s), followed by a statement of compliance. A detailed asset listing, including cost,
book, and market values, a transaction ledger, an earned interest report, and a cash flow report follow
the summary page.
Monthly statements are accessible on the Chandler Client Portal. Clients receive an email notification
stating that the statement is available for download no later than the third business day following month-
end.
Quarterly Reports: We also provide quarterly investment reports in a format designed to facilitate
discussion between Chandler investment professionals and the City’s staff. The report presents portfolio
characteristics, return, compliance and a summary of accounts under management using graphs, charts,
and illustrations in a format that is effective for management, elected officials and interested members
of the public. We provide this report for our regular meetings with the City.
Reports will be prepared in accordance with state law and the Governmental Accounting Standards
Board (GASB), and are compiled to meet your specific needs. Chandler Asset Management claims
compliance with the Global Investment Performance Standards (GIPS®), and prepares and presents its
performance in compliance with these standards. Chandler is independently verified by ACA
Performance Services for firm-wide GIPS® compliance.
Chandler provides monthly portfolio accounting and performance statements as well as mark-to-market
fair value pricing for securities in accordance with GASB 31. We provide a GASB 40 report to all
governmental clients, which provides the information needed to prepare the required fiscal year-end
portfolio risk assessment, and we will be able to assist the City in drafting the narratives for GASB notes.
We have developed a GASB 72 report which is available by fiscal year-end. The GASB 72, Fair Value
Measurement and Application, issued in February of 2015, requires government investments to be
measured at fair market value. It also requires disclosures regarding how fair value was measured, what
hierarchy the investment fits into, and any special valuation processes used.
Chandler’s investment and operations professionals remain dedicated to staying in front of all GASB
pronouncements, interpretations, and implementation guidelines as they affect our government clients
from a reporting and compliance perspective.
Please see Chandler’s Sample Monthly Statement and Quarterly Report in the Appendix.
d. How will you notify us of investment transactions?
Chandler can send you documentation of investment transactions daily, including competitive bidding
procedures documented on trade tickets.
e. Are confirmations of investment transactions sent directly by the broker/dealer to the client?
The broker will provide you with trade confirmation generally a few days after the transaction.
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9. REFERENCES
a. Provide a list of at least five client references in California. References should be public agencies
with portfolio size and investment objectives similar to those of the City. Include length of time
managing the assets, contact name, and phone number. The City reserves the right to contact each of
the references listed for additional information regarding your firm’s qualifications.
Chandler Current Client References
Client Contact Information Dates of
Service AUM* Type of Account(s)
City of Merced
678 W. 18th Street
Merced, CA 95340
Venus Rodriguez
Finance Officer
Ph: (209) 385-8547
rodriguezv@cityofmerced.org
2018-
present $262 M
Investment
management of
operating funds in
the 1–5 year
strategy.
City of Tracy
333 Civic Center Plaza
Tracy, CA 95376
Raymond McCray
Treasurer
Ph: (209) 831-6843
ray.mccray@ci.tracy.ca.us
1999-
present $144 M
Investment
management of
operating and bond
proceeds funds in
the 0-3 year
strategy.
City of Cupertino
10300 Torre Avenue
Cupertino, CA 95014
Kristina Alfaro
Authorized Representative
Ph: (408) 777-3200
kristinaa@cupertino.org
2018-
present $140 M
Investment
management of
operating funds in
the 1–3 year
strategy.
City of Danville
510 La Gonda Way
Danville, CA 94526
Joseph Calabrigo
Town Manager
Ph: (925) 314-3302
jcalabrigo@danville.ca.gov
1995-
present $80 M
Investment
management of
operating and bond
proceeds funds 3
month and 1–3
year strategies.
City of San Leandro
835 East 14th Street
San Leandro, CA 94577
Susan Hsieh
Finance Director
Ph: (510) 577-3323
shsieh@sanleandro.org
2004-
present $111 M
Investment
management of
operating funds 1–
3 year strategy.
*Chandler assets under management as of 12/31/2021. This list only includes clients who have given permission to be listed. It is not known
whether the listed clients approve or disapprove of Chandler, or the services provided.
10. CONFIRMATION
Provide confirmation of your firm’s ability to meet the City’s Standard Consulting Agreement and
insurance requirements. Exceptions to the Agreement and insurance requirements shall be specifically
noted in the Proposal.
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Chandler confirms the ability to meet the City’s Standard Consulting Agreement. Chandler complies with
the City’s minimum insurance requirements at all levels. We have included our current Certificate of
Insurance in the Appendix.
Standard Consulting Agreement
We have reviewed the City’s Professional Services Agreement and do not have any exception to the
proposed terms or conditions stated within the document. We respectfully request that Dublin includes
our Proposed Additional Terms included in the Appendices.
Conflict of Interest
Chandler agrees that, for the term of this contract, no member, officer or employee of the City or of a
public body within Alameda County or member or delegate to the Congress of the United States, during
his/her tenure or for one year thereafter, shall have any direct interest in the contracts or any direct or
material benefit arising therefrom. There are no conflicts of interest to formally report.
Equal Employment Opportunity
Chandler is an equal opportunity employer. Chandler's policy is to comply with all state and federal
regulations relative to nondiscrimination in employment. Chandler provides equal opportunity to all
applicable employees and applicants. Chandler does not discriminate in compensation or conditions of
employment, including recruitment, hiring, promotion, benefits, demotion, training, transfer, discipline,
or discharge, of any applicant or employee on the basis of race, citizenship, color, national origin,
ancestry, religion, sex, age, medical condition, mental or physical disability, pregnancy, childbirth,
marital status, registered domestic partner status, sexual orientation, transgender, gender identity,
gender expression, U.S. veteran status, genetic characteristics, or any other consideration made
unlawful by federal, state or local law. All such discrimination is unlawful, as well as contrary to
Chandler’s values.
In order to ensure equal employment opportunities for qualified applicants or employees with a
disability, Chandler will make reasonable accommodations for the known physical or mental limitation
unless undue business hardship would result. An applicant or employee who requires an accommodation
to perform the job's essential functions should contact Firm Management and request such
accommodation. The individual with the disability should specify what accommodation he or she needs
to perform his or her job. If the accommodation is reasonable and will not impose an undue business
hardship, Chandler will make the necessary change.
Chandler is committed to complying with all applicable laws providing equal employment opportunities.
This commitment applies to all persons involved in the operations of Chandler and prohibits unlawful
discrimination by any employee of Chandler. Anyone found to be engaging in any type of unlawful
discrimination will be subject to disciplinary action, up to and including termination of employment. Any
employee who believes they have been subjected to any form of unlawful discrimination should notify
their supervisor, Human Resources, or any member of the Management Team. The complaint should be
specific and should include the names of the individuals involved and the names of any witnesses.
Chandler will immediately undertake an effective, thorough, and objective investigation and attempt to
resolve the situation.
If Chandler determines that unlawful discrimination has occurred, effective remedial action will be taken
commensurate with the severity of the offense. Appropriate action also will be taken to deter any future
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discrimination. Chandler will not retaliate against any employee filing a complaint and will not knowingly
permit retaliation by management, employees, or co-workers.
Chandler aggressively recruits to attract top-caliber individuals to all levels of the organization. Vacant
or new positions may be filled by either transfer or promotion of existing employees or by newly
recruited or applied employees. Recruitment may be conducted through advertising, employment
agencies, schools, employee referrals, or technical and trade referrals. Supervisors/managers will
consider the most appropriate method of recruitment. All recruitment will be conducted in an ethical,
professional, and non-discriminatory manner. Chandler provides equal opportunity to all applicants
based on demonstrated ability, experience, and training in accordance with the company’s Equal
Employment Opportunity Policy.
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Consulting Services Agreement between City of Dublin and July 1, 2022
Chandler Asset Management for Investment and Asset Management Services Exhibit C – Page 1 of 1
EXHIBIT C
INDEMNIFICATION
Consultant shall indemnify, defend with counsel acceptable to City, and hold harmless City and its officers,
elected officials, employees, agents and volunteers from and against any and all liability, loss, damage,
claims, expenses, and costs (including without limitation, attorney’s fees and costs and fees of litigation)
(collectively, “Liability”) of every nature arising out of or in connection with Consultant’s performance of the
services called for or its failure to comply with any of its obligations contained in this Agreement, except
such Liability caused by the sole negligence or willful misconduct of City.
Notwithstanding the forgoing, to the extent this Agreement is a “construction contract” as defined by
California Civil Code Section 2782, as may be amended from time to time, such duties of Consultant to
indemnify shall not apply when to do so would be prohibited by California Civil Code Section 2782.
The Consultant’s obligation to defend and indemnify shall not be excused because of the Consultant’s
inability to evaluate Liability or because the Consultant evaluates Liability and determines that the
Consultant is not liable to the claimant. The Consultant must respond within 30 days to the tender of any
claim for defense and indemnity by the City. If the Consultant fails to accept or reject a tender of defense
and indemnity within 30 days, in addition to any other remedy authorized by law, so much of the money due
the Consultant under and by virtue of this Agreement as shall reasonably be considered necessary by the
City, may be retained by the City until disposition has been made of the claim or suit for damages, or until
the Consultant accepts or rejects the tender of defense, whichever occurs first.
3070368.1
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Consulting Services Agreement between City of Dublin and July 1, 2022
Chandler Asset Management for Investment and Asset Management Services Exhibit D – Page 1 of 1
EXHIBIT D
CITY OF DUBLIN’S INVESTMENT POLICY
See attached.
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STATEMENT OF INVESTMENT POLICY FOR THE CITY OF DUBLIN
I.INTRODUCTION
This Statement of Investment Policy is intended to identify various policies and
procedures that will foster a prudent and systematic investment program designed to
seek the City's objectives of safety, liquidity and return through a diversified investment
portfolio. This policy also serves to organize and formalize the City's investment-related
activities, while complying with all applicable status governing the investment of public
funds.
II.SCOPE
This policy covers all funds and investment activities under the direct authority of the
City of Dublin, as set forth in the State Government Code, sections 53600 et seq.,
excluding any bond- related proceeds or reserves, which are governed by their bond
indentures. Cash held by the City shall be pooled in order to more effectively manage
City cash resources. All pooled funds are accounted for in the City's Comprehensive
Annual Financial Report and include:
Funds
General Fund
Special Revenue Funds
Capital Project Funds
Internal Service Funds
Enterprise Funds
Agency Funds
This original investment policy was adopted by the City of Dublin (the "City"), on
August 21, 2007. This update to the Policy is effective on September 1, 2021 and
replaces any previous versions.
III.OBJECTIVES
The overall program shall be designed and managed with a degree of professionalism
worthy of the public trust. The primary objectives, in order of priority, of the City's
investment activities shall be:
I)Safety: Safety of principal is the foremost objective of the investment program.
The City's investments shall be undertaken in a manner that seeks to safeguard
the principal of the funds under its control by maintaining an appropriate risk
level.
2)Liquidity: The City's investment portfolio will remain sufficiently liquid to enable
the City to meet its reasonably anticipated cash flow requirements.
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3)Return: Return should become a consideration only after the basic requirements
of safety and liquidity have been met. The City seeks to attain market average
rate of return on its investments throughout economic cycles, consistent with
constraints imposed by its safety objectives and cash flow considerations.
4)Diversification: The investment portfolio will be diversified to avoid incurring
unreasonable and avoidable risks regarding specific security types or individual
financial institutions. This shall also conform with applicable sections of the
Government Code.
IV.DELEGATION OF AUTHORITY
As authorized in Government Code Section 53607, the City Council delegates the
authority to invest funds of the City to the City Treasurer and/or any duly appointed
Deputy City Treasurer. The City Treasurer and any duly appointed Deputy City
Treasurer shall make all investment decisions and transactions in strict accordance
with State law and this investment policy. The Administrative Services Director shall
be designated as the City Treasurer and the City Manager and/or Assistant
Administrative Services Director shall be designated as the Deputy City Treasurer.
This delegation shall be for a one-year period until the delegation of authority is
revoked or expires. The City Council may renew the authority each year as part of
an annual review of this policy.
The City Treasurer shall establish procedures for the operation of the investment
program. The City Treasurer shall be also responsible for all transactions undertaken
and establishing a system of controls to regulate the activities of subordinates.
The City recognizes that in a diversified portfolio, occasional measured losses may be
inevitable and must be considered within the context of the overall portfolio's return
and the cash flow requirements of the City. Authorized individuals acting in accordance
with written procedures and the investment policy and exercising due diligence shall
be relieved of personal responsibility for an individual security's credit risk or market
price changes, provided deviations from expectations are reported in a timely fashion
and appropriate action is taken to control adverse developments.
The City may engage the services of one or more external investment managers to
assist in the management of the City's investment portfolio in a manner consistent
with the City's objectives. Such external managers may be granted discretion to
purchase and sell investment securities in accordance with this investment policy.
Such managers must be registered under the Investment Advisors Act of 1940.
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V.PRUDENCE
Pursuant to California Government Code Section 53600.3, all persons authorized to
make investment decisions on behalf of the City are trustees and therefore fiduciaries
subject to the prudent investor standard: "When investing, reinvesting, purchasing,
acquiring, exchanging, selling, or managing public funds, a trustee shall act with care,
skill, prudence, and diligence under the circumstances then prevailing, including, but
not limited to, the general economic conditions and the anticipated needs of the agency,
that a prudent person acting in a like capacity and familiarity with those matters would
use in the conduct of funds of a like character and with like aims, to safeguard the
principal and maintain the liquidity needs of the agency."
VI.ETHICS AND CONFLICTS OF INTEREST
All participants in the investment process shall acts as custodians of the public trust.
Investment officials shall recognize that the investment portfolio is subject to public
review and evaluation. The overall program shall be designed and managed with a
degree of professionalism that is worthy of the public trust. Thus employees and officials
involved in the investment process shall refrain from personal business activity that
conflicts with proper execution of the investment program, or impairs their ability to
make impartial investment decisions. Additionally, the City Treasurer and the Deputy
Treasurer shall file applicable financial disclosures as required by the Fair Political
Practices Commission (FPPC).
VII.INTERNAL CONTROLS
The Treasurer is responsible for establishing and maintaining an internal control
structure designed to ensure that the assets of the entity are protected from loss, theft
or misuse. The internal control structure shall be designed to provide reasonable
assurance that these objectives are met. The concept of reasonable assurance
recognizes that (1) the cost of a control should not exceed the benefits likely to be
derived; and (2) the valuation of costs and benefits requires estimates and judgments
by management. Periodically as deemed appropriate by City Management and/or the
City Council an independent analysis by an external auditor shall be conducted to
review internal controls, account activity and compliance with policies and procedures.
VIII.AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS
To the extent practical the Treasurer shall endeavor to complete investment
transactions using a competitive bid process whenever possible. It shall be the City's
policy to purchase securities only from authorized institutions and firms. No deposit of
public funds shall be made except in a qualified public depository as established by
state laws.
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Institutions eligible to transact investment business with the City include:
1. Primary government dealers as designated by the Federal Reserve Bank and
non-primary government dealers
2. Nationally or state chartered banks
3. The Federal Reserve Bank
4. Direct issuers of securities eligible for purchase
The Treasurer shall maintain procedures for the establishing a list of authorized
broker/dealers and financial institutions which are approved for investment purposes.
These may include primary or regional dealers that qualify under Securities & Exchange
Commission Rule 15C3-l (uniform net capital rule). The City requires each firm that will
be used for the purchase or sale of securities to be evaluated by the Treasurer prior to
any investments. The firms shall submit current financial statements, and annual
audited financial statements each year thereafter, which are to be evaluated by the
Treasurer. At a minimum, the firm must be financially sound and have been in business
a minimum of three years. In addition, the firms must provide: proof of National
Association of Security Dealers membership, proof of state registration or exemption,
and certificate of having read the City's investment policy.
If an investment adviser is retained by the City, then that adviser will be permitted
to use their own list of approved broker/dealers and financial institutions for investment
purposes.
IX. AUTHORIZED AND SUITABLE INVESTMENTS
The City's investments are governed by Government Code, Sections 53600 et seq.
Within the investments permitted by the Government Code, the City seeks to further
restrict eligible investments to the guidelines listed below. In the event an apparent
discrepancy is found between this Policy and the Government Code, the more restrictive
parameters will take precedence. Percentage holding limits listed in this section apply
at the time the security is purchased. Any investment currently held at the time the
Policy is adopted which does not meet the new Policy guidelines can be held until
maturity, and shall be exempt from the current Policy. At the time of the investment's
maturity or liquidation such funds shall be reinvested only as provided in the most
current Policy.
An appropriate risk level shall be maintained by primarily purchasing securities that
are of high quality, liquid, and marketable. The portfolio shall be diversified by security
type and institution to avoid incurring unreasonable and avoidable risks regarding
specific security types or individual financial institutions.
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1.United States Treasury Issues. United States Treasury notes, bonds, bills, or
certificates of indebtedness, or those for which the faith and credit of the United
States are pledged for the payment of principal and interest. There is no limitation
as to the percentage of the portfolio that may be invested in this category. The
maximum maturity of these securities is five years.
2.Federal Agency Obligations. Federal agency or United States government-sponsored
enterprise obligations, participations, or other instruments, including those issued
by or fully guaranteed as to principal and interest by federal agencies or United
States government- sponsored enterprises. There is no limitation as to the
percentage of the portfolio that may be invested in this category. However, the
portfolio's exposure to any one federal agency issuer is limited to 35 percent of the
overall portfolio. The limit of the overall portfolio's exposure to callable federal agency
securities is 25 percent. The maximum maturity for agency securities is five years.
3. Bankers' Acceptances. Bankers' acceptances, otherwise known as bills of exchange
or time drafts, that are drawn on and accepted by a commercial bank. Bankers'
acceptances must be secured by the irrevocable primary obligation of the accepting
domestic bank. Purchasers are limited to issuers whose short-term debt is rated "A-
1" or higher, or the equivalent, by a Nationally Recognized Statistical-Rating
Organization (NRSRO). Bankers' acceptances cannot exceed a maturity of 180
days. A maximum of 40 percent of the portfolio may be invested in this category.
The amount invested in bankers' acceptances with any one financial institution in
combination with any other debt from that financial institution shall not exceed 20
percent of the portfolio.
4. Commercial Paper. Commercial paper of "prime" quality rated "A-1" or higher, or
the equivalent, by a NRSRO. The entity that issues the commercial paper shall
meet all of the following conditions in either paragraph (A) or paragraph (B):
(A)The entity meets the following criteria: (i) Is organized and operating in the
United States as a general corporation. (ii) Has total assets in excess of five
hundred million dollars ($500,000,000). (iii) Has debt other than commercial
paper, if any, that is rated "A" or higher by a nationally recognized statistical-
rating organization.
(B)The entity meets the following criteria: (i) Is organized within the United States
as a special purpose corporation, trust, or limited liability company. (ii) Has
program wide credit enhancements including, but not limited to, over
collateralization, letters of credit, or surety bond. (iii) Has commercial paper
that is rated "A-1" or higher, or the equivalent, by a nationally recognized
statistical-rating organization.
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Eligible commercial paper shall have a maximum maturity of 270 days or less and
not represent more than 10 percent of the outstanding paper of an issuing
corporation. A maximum of 25 percent of the portfolio may be invested in this
category. Under a provision of the California Government Code sunsetting
on January 1, 2026, no more than 40 percent of the portfolio may be
invested in Commercial Paper if the Agency’s investment assets under
management are greater than $100,000,000. The amount invested in
commercial paper of any one issuer in combination with any other debt from that
issuer shall not exceed 20 percent of the portfolio.
5. Negotiable Certificates of Deposit. Negotiable certificates of deposit (NCDs) issued
by a nationally or state-chartered bank, a savings association or a federal
association, a state or federal credit union, or by a state-licensed branch of a foreign
bank. Purchases are limited to institutions which have long-term debt rated "A" or
better and/or have short-term debt rated at least "A-1" or higher, or the equivalent
by a NRSRO. A maximum of 30 percent of the portfolio may be invested in this
category. The amount invested in NCDs with any one financial institution in
combination with any other debt from that financial institution shall not exceed 20
percent of the portfolio. The maximum maturity of these securities is five years.
6. Time Certificates of Deposit. Time Certificates of Deposit (TCDs) placed with
commercial banks and savings and loans. The purchase of TCDs from out-of-state
banks or savings and loans is prohibited. The amount on deposit shall not exceed
the shareholder's equity in the financial institution. To be eligible for purchase, the
financial institution must have received a minimum overall satisfactory rating for
meeting the credit needs of California Communities in its most recent evaluation, as
provided Government Code Section 53635.2. TCDs are required to be
collateralized as specified under Government Code Section 53630 et. seq. The
Treasurer, at his discretion, may waive the collateralization requirements for any
portion that is covered by federal (FDIC) insurance. The City shall have a signed
agreement with the depository per Government Code Section 53649. The
maximum maturity of these securities may not exceed one (1) year in maturity. A
maximum of 10 percent of the portfolio may be invested in this category.
7. Mutual Funds and Money Market Mutual Funds that are registered with the Securities
and Exchange Commission under the Investment Company Act of 1940, provided
that,
a. MUTUAL FUNDS that invest in the securities and obligations as authorized under
California Government Code, Section 53601 (a) to (k) and (m) to (q) inclusive and
that meet either of the following criteria:
1. Attained the highest ranking or the highest letter and numerical rating provided
by not less than two (2) NRSROs; or
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2.Have retained an investment adviser registered or exempt from registration with
the Securities and Exchange Commission with not less than five years’
experience investing in the securities and obligations authorized by California
Government Code, Section 53601 and with assets under management in excess
of $500 million.
3.No more than 10% of the total portfolio may be invested in shares of any one
mutual fund.
b.MONEY MARKET MUTUAL FUNDS registered with the Securities and Exchange
Commission under the Investment Company Act of 1940 and issued by diversified
management companies and meet either of the following criteria:
1.Have attained the highest ranking or the highest letter and numerical rating
provided by not less than two (2) NRSROs; or
2.Have retained an investment adviser registered or exempt from registration with
the Securities and Exchange Commission with not less than five years’
experience managing money market mutual funds with assets under
management in excess of $500 million.
3.No more than 20% of the total portfolio may be invested in Money Market Mutual
Funds.
c.No more than 20% of the total portfolio may be invested in these securities.
.
8.State of California Local Agency Investment Fund (LAIF). The City may invest
up to the maximum as permitted by LAIF. For due diligence, the Treasurer shall
maintain on file a copy of LAIF's current Answer Book.
9.California Asset Management Program (CAMP). Shares of beneficial interest
issued by a joint powers authority organized pursuant to Government Code Section
6509.7 that invests in the securities and obligations authorized in subdivisions (a)
to (n), inclusive of Government Code Section 53601. For due diligence, the
Treasurer shall maintain on file a copy of CAMP's current Information Statement.
10.Medium Term Notes. Medium-term notes, defined as all corporate and depository
institution debt securities with a maximum remaining maturity of five years or less,
issued by corporations organized and operating within the United States or by
depository institutions licensed by the United States or any state and operating
within the United States. Purchases are limited to securities rated "A" or higher, or
the equivalent, by a NRSRO. A maximum of 30 percent of the City's portfolio may
be invested in this category and a maximum of 5 percent with any one issuer. The
maximum maturity of these securities is five years.
11.Asset-Backed, Mortgage-Backed and Collateralized Mortgage Obligation
Securities. The City may purchase such securities provided that they are rated
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"AA" or higher, or the equivalent, by a NRSRO. Purchase of securities authorized
by this subdivision may not exceed 20 percent of the portfolio, and a maximum of
5 percent per issue. The maximum maturity of these securities is five years.
12.Municipal Securities. Obligations of the State of California, any of the other 49
states, or any local agency within the state of California, may be purchased by
the City provided that long-term obligations are rated "A" or higher, or the
equivalent, by at least one NRSRO. There are no limits on the dollar amount or
percentage that the city may invest in municipal securities; however, investments
in these securities are limited to a maximum of 5 percent with any single issuer. The
maximum maturity of these securities is five years.
13. Supranationals provided that issues are US dollar denominated senior unsecured
unsubordinated obligations issued or unconditionally guaranteed by the International
Bank for Reconstruction and Development, International Finance Corporation, or
Inter-American Development Bank. The securities must be rated in a rating category
of “AA” or its equivalent by a NRSRO. No more than 30% of the portfolio may be
invested in these securities, and no more than 10% of the portfolio may be invested
in any single issuer. The maximum maturity does not exceed five (5) years.
X.AUTHORIZED INVESTMENTS FOR BOND PROCEEDS
Bond proceeds shall be invested in securities permitted by the applicable bond
documents. If the bond documents are silent as to the permitted investments, bond
proceeds will be invested in securities permitted by this Policy. Notwithstanding the
provisions of Policy, the percentage or dollar portfolio limitations listed in elsewhere
in this Policy do not apply to bond proceeds. In addition to the securities listed in
Section IX above, bond proceeds may be invested in structured investment products if
approved by the Treasurer.
XI.PROHIBITED INVESTMENT PRACTICES AND INSTRUMENTS
The City shall not make investments for the purpose of trading or speculation as the
dominate criterion such as anticipation of appreciation of capital value through changes
in market rates. Securities are purchased with the intent to hold to maturity.
Any investment in a security not specifically listed as an Authorized and Suitable
Investment above, but otherwise permitted by the Government Code, is prohibited
without the prior approval of the City Council. Section 53601.6 of the Government Code
specifically disallows investments in invoice floaters, range notes, or interest-only strips
that are derived from a pool of mortgages. Under a provision of the California
Government Code sunsetting on January 1, 2026, securities backed by the United States
Government that could result in a zero or negative interest accrual if held to maturity are
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permitted.
XII. REVIEW OF INVESTMENT PORTFOLIO
The City Treasurer shall periodically, but no less than quarterly, review the portfolio
to identify investments that do not comply with this investment policy and establish
protocols for reporting major and critical incidences of noncompliance to the City
Council.
XIII. TERM OF INVESTMENTS
Funds of the City will be invested in accordance with sound treasury management
principles. It is the objective of this Policy to provide a system which will accurately
monitor and forecast revenues and expenditures so that the City can invest funds to the
fullest extent possible.
The maximum maturity of individual investments shall not exceed the limits set forth
in under Authorized and Suitable Investments. No investment shall exceed a maturity
of five years from the date of purchase unless the City Council has granted express
authority to make that investment either specifically or as a part of an investment
program approved by the City Council no less than three months prior to the investment.
XIV. INVESTMENT RISK
(A) MARKET RISK
Market risk is the risk that the portfolio will decline in value (or will not optimize its
value) due to changes in the general level of interest rates. The City recognizes
that, over time, longer-term portfolios achieve higher returns. On the other hand,
longer-term portfolios have higher volatility of return. The City shall mitigate
market risk by providing adequate liquidity for short-term cash needs, and by
making some longer-term investments only with funds that are not needed for
current cash flow purposes.
The City further recognizes that certain types of securities, including variable rate
securities, securities with principal pay-downs prior to maturity, and securities with
embedded options, will affect the market risk profile of the portfolio differently in
different interest rate environments. The City, therefore, adopts the following
strategies to control and mitigate its exposure to market risk:
1) The maximum stated final maturity of individual securities in the portfolio shall
be five years, unless otherwise stated in this policy;
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2) The City shall maintain a minimum of three months of budgeted operating
expenditures in cash, cash equivalents and short term investments; and
3) The duration of the portfolio will typically be approximately equal to the
duration of a market index, selected by the City as its performance benchmark,
which meets the City's needs for cash flow and level of risk tolerance plus or
minus 20%.
(B) CREDIT RISK
In general, the City's portfolio will be diversified to avoid incurring unreasonable
and avoidable risks regarding specific security types or individual financial
institutions, such as credit risk. Credit risk is the risk that a security or a portfolio
will lose some or all of its value due to a real or perceived change in the ability of
the issuer to repay its debt. The City shall mitigate credit risk by adopting the
following strategies:
I) The diversification requirements included in Section IX are designed to mitigate
credit risk in the portfolio;
2) No more than 5% of the total portfolio may be deposited with or invested in
securities issued by any single issuer unless otherwise specified in this policy.
3) The City may elect to sell a security prior to its maturity and record a capital
gain or loss in order to improve the quality, liquidity or return of the portfolio
in response to market conditions or the City's risk preferences; and
4) If a security owned by the City is downgraded to a level below the requirements
of this policy, making the security ineligible for additional purchases, the
following steps will be taken:
a) Any actions taken related to the downgrade by the investment manager will
be communicated to the City in a timely manner.
b) If a decision is made to retain the security, the credit situation will be
monitored and reported back to the City.
XV. SAFEKEEPING AND CUSTODY
Investment securities are to be purchased when possible in book-entry form in the
City's name. All security transactions entered into by the City shall be conducted on a
delivery-versus-payment (DVP) basis. All cash and securities in the City's portfolio
shall be held in safekeeping in the City's name by a third party bank trust department,
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acting as agent for the City under the terms of a custody agreement executed by the
bank and the City. All investment transactions will require a safekeeping receipt or
acknowledgment generated from the trade. A monthly report will be received by the City
from the safekeeping institution listing all securities held in safekeeping with current
market data and other information. The only exception to the foregoing shall be
depository accounts and securities purchases made with: (i) local government
investment pools; (ii) time certificates of deposit, and, (iii) money mutual funds, since
the purchased securities are not deliverable. Term and non-negotiable instruments,
such as certificates of deposit, can be held by the Treasurer, or in safekeeping as the
Treasurer deems appropriate.
XVI.PERFORMANCE BENCHMARK
The investment portfolio shall be designed to attain a market-average rate of return
throughout budgetary and economic cycles, taking into account the City's risk
constraints, the cash flow characteristics of the portfolio, and state and local laws,
ordinances or resolutions that restrict investments. The Treasurer shall monitor and
evaluate the portfolio's performance relative to market benchmark, which will be included
in the Treasurer's quarterly report. The Treasurer shall select an appropriate, readily
available index to use as a benchmark.
XVII. REPORT INFORMATION
The Treasurer shall prepare a report to the City Council not less than semi-annually
which is available each year within 60 days following December 31st and June 30th. The
semi-annual report shall be presented at a subsequent regularly scheduled City Council
Meeting. The report shall be inclusive of a monthly listing of investment transactions.
At a minimum the report shall include the following (Revised 9-18-2012):
a)Type of Investment
b)Issuer
c)Date of Maturity
d)Par and dollar amount invested
e)Current Market Value as of the date of the report
f)Source of the market value information
g)A list of investment transactions.
h)A statement of compliance with the investment policy
i) A statement as to the ability of the City to meet its expenditure
requirements for the next six months
In addition, the City Treasurer will submit a monthly transaction report to the City Council.
XVIII.REVIEW OF INVESTMENT POLICY
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This policy shall be subject to review by the City Council on an annual basis, by
the second Council meeting in September. Any recommended modifications or
amendments shall be presented by Staff to the City Council for their consideration and
adoption.
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GLOSSARY OF TERMS
ACCRUED INTEREST: Interest earned but not yet received.
AGENCIES: Federal agency securities and/or Government-sponsored enterprises. Examples of
well-known agencies that issue bonds are Federal Home Loan Mortgage Corporation (FHLMC or
"Freddie Mac"), Federal National Mortgage Association (FNMA or "Fannie Mae"), and the Federal
Home Loan Bank.
AMORTIZATION: An accounting practice of gradually decreasing (increasing) an asset's book value
by spreading its depreciation (accretion) over a period of time.
ASKED: The price at which securities are offered.
ASSET BACKED SECURITIES: Securities supported by pools of installment loans or leases or by
pools of revolving lines of credit.
BANKERS' ACCEPTANCE (BA): A draft or bill or exchange accepted by a bank or trust company.
The accepting institution guarantees payment of the bill, as well as the issuer.
BASIS POINT: One basis point is one hundredth of one percent (.0 I ).
BENCHMARK: A comparative base for measuring the performance or risk tolerance of the
investment portfolio. A benchmark should represent a close correlation to the level of risk and the
average duration of the portfolio's investments.
BID PRICE: The price offered by a buyer of securities. (When you are selling securities, you ask for
a bid.) See Offer.
BOND: A financial obligation for which the issuer promises to pay the bondholder a specified stream
of future cash flows, including periodic interest payments and a principal repayment.
BOOK ENTRY: The system maintained by the Federal Reserve, by which most money market
securities are delivered to an investor's custodial bank. The Federal Reserve maintains a
computerized record of the ownership of these securities and records any changes in ownership
corresponding to payments made over the Federal Reserve wire (delivery versus payment.)
BOOK VALUE: The value at which a debt security is shown on the holder's balance sheet. Book
value is acquisition cost less amortization of premium or accretion of discount.
BROKER: A broker brings buyers and sellers together for a commission.
CALLABLE BOND: A bond issue in which all or part of its outstanding principal amount may be
redeemed before maturity by the issuer under specified conditions.
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CALL PRICE: The price at which an issuer may redeem a bond prior to maturity. The price is
usually at a slight premium to the bond's original issue price to compensate the holder for loss of
income and ownership.
CALL RISK: The risk to a bondholder that a bond may be redeemed prior to maturity.
CERTIFICATE OF DEPOSIT (CD): A deposit insured up to $100,000 by the FDIC at a set rate
for a specified period of time.
COLLATERAL: Securities, evidence of deposit or other property which a borrower pledges to
secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public
monies.
COLLATERALIZED MORTGAGE OBLIGATION (CMO): Classes of bonds that redistribute the
cash flows of mortgage securities (and whole loans) to create securities that have different levels of
prepayment risk, as compared to the underlying mortgage securities.
COMMERCIAL PAPER: An unsecured promissory note of industrial corporations, utilities and bank
holding companies having assets in excess of $500 million and an "A" or higher rating for the
issuer's debentures. Interest is discounted from par and calculated using the actual number of days
on a 360-day year. The notes are in bearer form, mature from one to 270 days and generally start
at $100,000. There is a secondary market for commercial paper and an investor may sell them prior
to maturity. Unused lines of credit back commercial paper from major banks.
COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR): The official annual financial report for
the City. It includes combined statements and basic financial statements for each individual fund and
account group prepared in conformity with Generally Accepted Accounting Principles (GAAP).
Supplemental information is also included including a detailed multi-year comparative statistics.
COST YIELD: The annual income from an investment divided by the purchase cost. Because it
does not give effect to premiums and discounts which may have been included in the purchase cost,
it is an incomplete measure of return.
COUPON: (a) The annual rate of interest that a bond's issuer promises to pay the bondholder on
the bond's face value. (b) A certificate attached to a bond evidencing interest due on a payment date.
CREDIT RISK: The risk that principal and/or interest on an investment will not be paid in a timely
manner due to changes in the condition of the issuer.
CURRENT YIELD: The interest paid on an investment expressed as a percentage of the current
price of the security.
CUSTODY: A banking service that provides safekeeping for the individual securities in a customer's
investment portfolio under a written agreement which also calls for the bank to collect and pay out
income, and to buy, sell, receive and deliver securities when ordered to do so by the account holder.
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DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling
for his own account.
DEBENTURE: A bond secured only by the general credit of the issuer.
DELIVERY VERSUS PAYMENT (DVP): Delivery versus payment is delivery of securities with an
exchange of money for the securities.
DERIVATIVES: (1) Financial instruments whose return profile is linked to, or derived from, the
movement of one or more underlying index or security, and may include a leveraging factor, or (2)
financial contracts based upon notional amounts whose value is derived from an underlying index or
security (interest rates, foreign exchange rates, equities or commodities).
DISCOUNT: The difference between the cost price of a security and its value at maturity when
quoted at lower than face value.
DISCOUNT SECURITIES: Non-interest bearing money market instruments that are issued a discount
and redeemed at maturity for full face value, e.g., U.S. Treasury Bills.
DIVERSIFI CATI0N: Dividing investment funds among a variety of securities
offering independent returns.
DURATION: A measure of the timing of the cash flows, such as the interest payments and the
principal repayment, to be received from a given fixed-income security. This calculation is based on
three variables: term to maturity, coupon rate, and yield to maturity. The duration of a security is
a useful indicator of its price volatility for given changes in interest rates.
FEDERAL CREDIT AGENCIES: Agencies of the Federal government set up to supply credit to
various classes of institutions and individuals, e.g., S&L's, small business firms, students, farmers,
farm cooperatives, and exporters.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that insures bank
deposits, currently up to $100,000 per deposit.
FEDERAL FUNDS RATE: The rate of interest at which Fed funds are traded. This rate is currently
pegged by the Federal Reserve through open-market operations.
FEDERAL HOME LOAN BANKS (FHLB): Government sponsored wholesale banks (currently 12
regional banks) which lend funds and provide correspondent banking services to member commercial
banks, thrift institutions, credit unions and insurance companies.
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA or Fannie Mae): FNMA, like GNMA
was chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal
corporation working under the auspices of the Department of Housing and Urban Development (HUD).
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The corporation is called, is a private stockholder-owned corporation. The corporation's purchases
include a variety of adjustable mortgages and second loans, in addition to fixed-rate mortgages.
FEDERAL OPEN MARKET COMMITTEE (FOMC): Consists of seven members of the Federal
Reserve Board and five of the twelve Federal Reserve Bank Presidents. The President of the New
York Federal Reserve Bank is a permanent member, while the other Presidents serve on a rotating
basis. The Committee periodically meets to set Federal Reserve guidelines regarding purchases
and sales of Government Securities in the open market as a means of influencing the volume of
bank credit and money.
FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and
consisting of a seven member Board of Governors in Washington, D.C., 12 regional banks and about
5,700 commercial banks that are members of the system.
FED WIRE: A wire transmission service established by the Federal Reserve Bank to facilitate the
transfer of funds through debits and credits of funds between participants within the Fed system.
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC or Freddie Mac): A United States
government sponsored corporation.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA or Ginnie Mae): Securities
influencing the volume of bank credit guaranteed by GNMA and issued by mortgage bankers,
commercial banks, savings and loan associations, and other institutions. Security holder is protected
by full faith and credit of the U.S. Government. Ginnie Mae securities are backed by the FHA, VA
or FmHA mortgages. The term "pass- throughs" is often used to describe Ginnie Maes.
HAIRCUT: The margin or difference between the actual market value of a security and the value
assessed by the lending side of a transaction (i.e. a repo).
INTEREST RATE: The annual yield earned on an investment, expressed as a percentage.
LEVERAGE: Borrowing funds in order to invest in securities that have the potential to pay earnings
at a rate higher than the cost of borrowing.
LIQUIDITY: Refers to the ability to easily and rapidly convert a security into cash.
LOCAL AGENCY INVESTMENT FUND (LAIF): The local Agency Investment Fund (LAIF) is a
special fund in the California State Treasury created and governed pursuant to Government Code
Sections 16429.1 et seq. There are limits on the maximum dollars deposited by a city as well as the
number of transactions allowed each month.
LOCAL GOVERNMENT INVESTMENT POOL (LGIP): The aggregate of all funds from political
subdivisions that are placed in custody of the State Treasurer for investment and reinvestment.
MAKE WHOLE CALL: A type of call provision on a bond that allows the issuer to pay off the
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17
remaining debt early. Unlike a call option, with a make whole call provision, the issuer makes a lump
sum payment that equals the net present value (NPV) of future coupon payments that will not be
paid because of the call. With this type of call, an investor is compensated, or "made whole."
MARGIN: The difference between the market value of a security and the loan a broker makes using
that security as collateral.
MARKET RISK: The risk that the value of securities will fluctuate with changes in overall market
conditions or interest rates.
MARKET VALUE: The price at which a security is trading and could presumably be purchased or
sold on a specific date.
MARKING TO MARKET: The process of posting current market values for securities in a portfolio.
MATURITY: The date upon which the principal or stated value of an investment becomes due and
payable.
MEDIUM TERM NOTES (MTNs): Unsecured, investment-grade senior debt securities of major
corporations which are sold in relatively small amounts on either a continuous or an intermittent
basis. MTNs are highly flexible debt instruments that can be structured to respond to market
opportunities or to investor preferences.
MODIFIED DURATION: The percent change in price for a 100 basis point change in yields. Modified
duration is the best single measure of a portfolio's or security's exposure to market risk.
MONEY MARKET: The market in which short-term debt instruments (T-bills, discount notes,
commercial paper, and banker's acceptances) are issued and traded.
MONEY MARKET MUTUAL FUND: Mutual funds that invest solely in money market instruments
(short- term debt instruments, such as Treasury bills, commercial paper, bankers' acceptances, and
federal funds).
MORTGAGE PASS THROUGH SECURITIES: A securitized participation in the interest and
principal cash flows from a specified pool of mortgages. Principal and interest payments made on
the mortgages are passed through to the holder of the security.
MUNICIPAL SECURITIES: Securities issued by state and local agencies to finance capital and
operating expenses.
MUTUAL FUND: An entity which pools the funds of investors and invests those funds in a set of
securities which is specifically defined in the fund's prospectus. Mutual funds can be invested in
various types of domestic and/or international stocks, bonds, and money market instruments, as
set forth in the individual fund's prospectus. For most large, institutional investors, the costs
associated with investing in mutual funds are higher than the investor can obtain through an
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18
individually managed portfolio.
NATIONAL ASSOCIATION OF SECURITIES DEALERS (NASD): A self-regulatory organization
(SRO) of brokers and dealers in the over-the-counter securities business. Its regulatory mandate
includes authority over firms that distribute mutual fund shares as well as other securities.
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATIONS (NSROs); Credit rating
agencies whose ratings are permitted to be used for regulatory purposes such as those imposed by
the Securities and Exchange Commission.
NEGOTIABLE CERTIFICATE OF DEPOSIT: A large denomination certificate of deposit which can
be sold in the open market prior to maturity.
NEW ISSUE: Term used when a security is originally "brought" to market.
OFFER: The price asked by a seller of securities. (When you are buying securities, you ask for an
offer.) See Asked and Bid.
OPEN MARKET OPERATIONS: Purchases and sales of government and certain other securities
in the open market by the New York Federal Reserve Bank as directed by the FOMC in order to
influence the volume of money and credit in the economy. Purchases inject reserves into the bank
system and stimulate growth of money and credit; sales have the opposite effect. Open market
operations are the Federal Reserve' s most important and most flexible monetary policy tool.
PORTFOLIO: Collection of securities held by an investor.
PREMIUM: The amount by which the price paid for a security exceeds the security's par value.
PREPAYMENT SPEED: A measure of how quickly principal is repaid to investors in mortgage
securities.
PREPAYMENT WINDOW: The time period over which principal repayments will be received on
mortgage securities at a specified prepayment speed.
PRIMARY DEALER: A group of government securities dealers who submit daily reports of market
activity and positions and monthly financial statements to the Federal Reserve Bank of New York
and are subject to its informal oversight. Primary dealers include Securities and Exchange
Commission (SEC)-registered securities broker-dealers, banks, and a few unregulated firms.
PRINCIPAL: The face value or par value of a debt instrument, or the amount of capital invested
in a given security.
PRUDENT PERSON (PRUDENT INVESTOR) RULE: A standard of responsibility which applies to
fiduciaries. In California, the rule is stated as "Investments shall be managed with the care, skill,
prudence and diligence, under the circumstances then prevailing, that a prudent person, acting in
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a like capacity and familiar with such matters, would use in the conduct of an enterprise of like
character and with like aims to accomplish similar purposes."
PURCHASE DATE: The date in which a security is purchased for settlement on that or a later date.
RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current
market price. This may be the amortized yield to maturity on a bond or the current income return.
REALIZED YIELD: The change in value of the portfolio due to interest received and interest earned
and realized gains and losses. It does not give effect to changes in market value on securities,
which have not been sold from the portfolio.
REGIONAL DEALER: A financial intermediary that buys and sells securities for the benefit of its
customers without maintaining substantial inventories of securities and that is not a primary dealer.
REPURCHASE AGREEMENT (RP OR REPO): A holder of securities sells these securities to an
investor with an agreement to repurchase them at a fixed price on a fixed date. The security "buyer"
in effect lends the "seller" money for the period of the agreement, and the terms of the agreement
are structured to compensate him for this.
RULE 2a-7 OF THE INVESTMENT COMPANY ACT: Applies to all money market mutual funds
and mandates such funds to maintain certain standards, including a 13- month maturity limit and
a 90-day average maturity on investments, to help maintain a constant net asset value of one dollar
($1.00).
SAFEKEEPING: See CUSTODY.
SECONDARY MARKET: A market made for the purchase and sale of outstanding issues following
the initial distribution.
SECURITIES & EXCHANGE COMMISSION: Agency created by Congress to protect investors m
securities transactions by administering securities legislation.
SETTLEMENT DATE: The date on which a trade is cleared by delivery of securities against funds.
STRUCTURED NOTE: A complex, fixed income instrument, which pays interest, based on a
formula tied to other interest rates, commodities or indices. Examples include inverse floating rate
notes which have coupons that increase when other interest rates are falling, and which fall when
other interest rates are rising, and "dual index floaters," which pay interest based on the relationship
between two other interest rates - for example, the yield on the ten-year Treasury note minus the
Libor rate. Issuers of such notes lock in a reduced cost of borrowing by purchasing interest rate
swap agreements.
TENNESSEE VALLEY AUTHORITY (TVA): The Tennessee Valley Authority provides flood control
and power and promotes development in portions of the Tennessee, Ohio, and Mississippi River
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valleys. TVA currently issues discount notes and bonds.
TIME CERTIFICATE OF DEPOSIT: A non-negotiable certificate of deposit which cannot be sold
prior to maturity.
TOTAL RATE OF RETURN: A measure of a portfolio's performance over time. It is the internal
rate of return, which equates the beginning value of the portfolio with the ending value; it includes
interest earnings, realized and unrealized gains, and losses in the portfolio.
TREASURY BILLS: A non-interest bearing discount security issued by the U.S. Treasury to finance
the national debt. Most bills are issued to mature in three months, six months, or one year and are
sold on a discount basis.
TREASURY BONDS: Long-term coupon-bearing U.S. Treasury securities issued as direct
obligations of the U.S. Government and having initial maturities of more than 10 years.
TREASURY NOTES: Medium-term coupon-bearing U.S. Treasury securities issued as direct
obligations of the U.S. Government and having initial maturities of I to 10 years.
U.S. GOVERNMENT AGENCIES: Instruments issued by various US Government Agencies most
of which are secured only by the credit worthiness of the particular agency.
VOLATILITY: The rate at which security prices change with changes in general economic
conditions or the general level of interest rates.
WEIGHTED AVERAGE MATURITY (WAM): The average maturity of all the securities that comprise
a portfolio that is typically expressed in days or years.
YIELD: The rate of annual income return on an investment, expressed as a percentage. It is
obtained by dividing the current dollar income by the current market price of the security.
YIELD TO MATURITY: The rate of income return on an investment, minus any premium or plus
any discount, with the adjustment spread over the period from the date of purchase to the date of
maturity of the bond, expressed as a percentage.
YIELD CURVE: The yield on bonds, notes or bills of the same type and credit risk at a specific
date for maturities up to thirty years.
ZERO-COUPON SECURITY: Security that is issued at a discount and makes no periodic interest
payments. The rate of return consists of a gradual accretion of the principal of the security and is
payable at par upon maturity.
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256
REQUEST FOR PROPOSALS
INVESTMENT ADVISORY SERVICES
City of Dublin
Proposals must be received by: April 15, 2022
Jay Baksa, Assistant Administrative Services Director
100 Civic Plaza
City of Dublin, CA 94568
Proposals will be evaluated on the following: a) responsiveness to the Request for Proposal questions, b)
experience of the firm, c) experience and qualifications of the assigned individuals and d) Satisfaction of previous
clients.
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Request for Proposal
For
Investment Advisory Services
PURPOSE
The CITY OF DUBLIN (hereinafter “City”) hereby requests proposals from interested firms for the provision of
investment management services (hereinafter “Services”), and will receive proposals in the City of Dublin,
Administrative Services Department located at 100 Civic Plaza, Dublin, CA, 94568 on Friday, April 15, 2022, up to
the hour of 5:00 PM Pacific Standard Time.
BACKGROUND
The City is located in Eastern Alameda County, approximately 35 miles southeast of San Francisco. The City was
incorporated in 1982 with a population of 63,421 within 14.59 square miles. The City’s Administrative Services
Director serves as the City Treasurer, as delegated by the City Council, with the Assistant Administrative Services
Director serving as the Deputy City Treasurer and together are responsible for making investment decisions and
transaction is accordance with City’s Statement of Investment Policy (Attachment B). The City’s current
investment portfolio is approximately $382 million, with funds being managed by both the City and the City’s
current investment manager.
SCOPE OF SERVICES
The City of Dublin is soliciting proposals from investment advisory firms for portfolio management services. The
City’s primary investment objective is to achieve a reasonable rate of return on public funds while minimizing the
potential for capital losses arising from market changes or issuer default. Although the generation of revenue
through interest earnings on investments is an appropriate City goal, the primary consideration in the investment
of City funds is capital preservation in the overall portfolio. As such, the City’s yield objective is to achieve a
reasonable rate of return on City investments rather than the maximum generation of income, which could expose
the City to unacceptable risk.
The portfolio is currently being both passively managed, by the City, with approximately $149 million, in both the
California Local Agency Investment Fund (“LAIF”) and the California Asset Management Program (“CAMP”), as
well as actively managed by the City’s current investment manager, with funds of approximately $233 million.
Specific services to be performed include but are not limited to the following:
1.Manage the City’s portfolio with discretionary authority.
2.Assist the City with cash flows/maturity analysis.
3.Provide credit analysis of investment instruments in portfolio.
4.Provide monthly/quarterly/annual reporting of City funds you manage.
5.Attend quarterly meetings (in person or via teleconference) with City staff.
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6. Attend City Council meetings in person or via teleconference when necessary.
7. Evaluate market risk and develop strategies that minimize the impact on the portfolio.
8. Provide assurance of portfolio compliance with applicable policies and laws.
9. Establish an appropriate performance benchmark.
10. Ensure that portfolio structure matches the City’s objectives.
11. Perform broker/dealer due diligence and maintain relations with approved security brokers and dealers.
12. Review the City’s Statement of Investment Policy and make recommendations for change as appropriate.
13. Answer questions from staff and provide general guidance in related areas.
14. Coordinate with the City’s third‐party custodian for safekeeping of securities.
Investment practices and procedures must comply with state law and the City’s Statement of Investment Policy.
Experience and Qualifications
1. Investment Advisors must be currently registered as an Investment Advisor with the Securities and
Exchange Commission and remain registered during the term of the contract. If required under California
Law, Investment Advisors must also be registered with the California Department of Law and remain
registered during the term of the contract. Investment Advisors must have completed, obtained and
performed all registrations, examinations, approvals, authorizations, and consents required by any
governmental authority for such engagements.
2. Investment Advisors are required to possess a minimum of five (5) years of experience in providing
institutional investment advisory services.
3. Investment Advisors must have at least one billion dollars under advisement.
Process and General Conditions
1. Proposers shall submit proposals electronically to:
Jay Baksa
Assistant Administrative Services Director
Email: Jay.baksa@dublin.ca.gov
Electronic copies shall be submitted by an emailed PDF
2. Deadline for submitting the proposal is April 15, 2022 at 5:00 p.m.
3. The City will not pay for any costs incurred in preparation and submission of the proposals or in
anticipation of a contract. The format of submittals is at the discretion of the Proposer. Each proposal
shall be limited to a maximum of 30 pages, single‐sided, using minimum 12‐point font size. Page limit
excludes a table of contents, tabbed dividers, and resumes for Consultant’s team.
Schedule for RFP Process
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March 29, 2022 Request for Proposals released
April 8, 2022 Deadline to submit questions to City of Dublin
April 12, 2022 Addendum posted, if required
April 15, 2022 Proposals are due no later than 5:00 PM on April 15 electronically addressed to
Jay Baksa, Assistant Administrative Services Director, City of Dublin, to the email
address: Jay.Baksa@dublin.ca.gov. Late submittals will not be accepted.
TBD Interview firms (optional)
TBD Consulting Services Agreement scheduled for approval by the Dublin City Council.
(Tentative dates, subject to change)
RFP Submittal Requirements
Please prepare and organize your Statement of Qualification based on the requirements provided below. Any
other information you would like to include should be placed in a separated section at the back of your Statement
of Qualification. Please note however that the RFP submittal is limited to 30 pages maximum single sided
(excluding resumes), and should be submitted in 8 ½ x 11 format, in a 12‐point font. Page limit excludes a table
of contents, dividers, and resumes for Consultant’s team.
Please format your response to this request in the following order to facilitate comparisons among respondents.
1.Enclose a cover letter not to exceed one page, describing the firm's interest and commitment to perform
work necessary to provide Investment Advisory Services. The person authorized by the firm to negotiate
a contract with the City of Dublin shall sign the cover letter. Please include this cover letter within
document and not as a separate page.
2.Firm Background and Organization
a.Describe your organization, date founded, ownership and other business affiliations. Provide
number and location of affiliated offices. Specify the number of years your organization has
provided investment management service.
b.Describe your firm’s revenue sources (e.g., investment management, institutional research, etc).
c.Within the past three years, have there been any significant developments in your organization
(e.g., changes in ownership, new business ventures)? Do you expect any changes in the near
future?
d.Describe any U.S. Securities and Exchange Commission (SEC) censures or litigation involving your
organization, any officer, or employee at any time.
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e.Identify the types of accounts managed by your firm (e.g., government, pension, corporate, high
net worth, and endowment/foundation).
f.Describe your firm’s fiduciary liability and/or errors and omissions insurance coverage. Include
dollar amount of coverage.
3.Staffing
a.Identify the number of professionals employed by your firm by classification.
b.Provide an organizational chart showing functions, positions, and titles of all the professionals in
your organization.
c.Provide biographical information on investment professionals who will be involved in the
decision‐making process for the City’s portfolio, including number of years at your firm. Identify
the person who will be the primary portfolio manager assigned to the account.
4.Fees
a.Please include a copy of your firm’s fee schedule applicable to this RFP.
b.Identify any expenses that would not be covered through this fee structure and would be required
in order to implement the firm’s program.
c.Please provide a statement of fees for such additional services as arbitrage rebate, or other
related services.
d.Describe your firm’s compensation policies for investment professionals.
5.Assets Under Management
a.Summarize your institutional investment management asset totals by category for your latest
reporting period in the following table:
Operating Funds Other Funds (specify)
Governmental
Other Institutional
b.Provide the number of separate accounts whose portfolios consist of operating funds.
c.List in the following table the percentage by market value of aggregate assets under management
for your latest reporting period:
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Type of Assets Percent by Market Value
U.S. Treasury securities
Federal Agency obligations
Corporate securities rated AAA‐AA
Corporate securities rated A
Corporate securities rated BBB or lower
Other
Total
d. Describe the procedures that your firm has in place to address the potential or actual credit
downgrade of an issuer and to disclose and advise a client of the situation.
e. Provide data on account/asset growth over the past three years. Indicate the number of accounts
gained and the number of accounts lost.
f. Provide a copy of the firm’s most recent Form ADV, Parts I and II (including all schedules).
6. Investment Management Philosophy and Approach
a. Describe your firm’s investment philosophy for public clients, including your firm’s philosophy
regarding average duration, maturity, investment types, credit quality, and yield. How would you
apply your philosophy to the City of Dublin’s portfolio?
b. What are your primary strategies for adding value to portfolios (e.g., market timing, credit
research, trading)?
c. Describe the process you would recommend for establishing the investment objectives and
constraints for this account.
d. Do you have or would you recommend there be policy restrictions with respect to maturity,
sector, quality, and coupon? Please describe your firm’s decision‐making process.
e. Describe in detail your process of credit risk management, including how you analyze credit
quality, monitor credits on an ongoing basis, and how you would report credit to the City .
f. Describe your firm’s trading methodology.
g. Describe your research capabilities as they would pertain to the City’s portfolio. What types of
technical analysis do you use?
h. Describe the firm’s approach to managing relationships with the broker‐dealer community.
7. Portfolio Management
a. Are portfolios managed by teams or one individual?
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b. What is the average number of accounts handled per manager?
c. Which professional staff member will be the primary client contact for the City?
d. How frequently do you recommend meeting with us?
e. Describe procedures used to ensure that portfolios comply with client investment objectives,
policies, and bond resolutions.
8. Performance Reporting
a. Please describe how you typically report performance.
b. Please provide performance history for the past five years for current accounts comprised of
securities with maturities, quality, and sectors similar to those of City of Dublin. Indicate whether
your returns are calculated and compiled in accordance with the Global Investment Performance
Standards. If not, how does the performance presentation differ?
c. Do your reports conform to State reporting standards? Are you willing to customize your reports
to meet our specifications?
d. How will you notify us of investment transactions?
e. Are confirmations of investment transactions sent directly by the broker/dealer to the client?
9. References
a. Provide a list of at least five client references in California. References should be public agencies
with portfolio size and investment objectives similar to those of the City. Include length of time
managing the assets, contact name, and phone number. The City reserves the right to contact
each of the references listed for additional information regarding your firm’s qualifications.
10. Provide confirmation of your firm’s ability to meet the City’s Standard Consulting Agreement and
insurance requirements. Exceptions to the Agreement and insurance requirements shall be specifically
noted in the Proposal.
As stated in the Process and General Conditions and Schedule for RFP Process sections above, proposals are due
no later than April 15 by 5:00pm. Any Proposal submitted after the stated deadline will not be accepted for
consideration.
Standard Consulting Agreement:
It is anticipated that the services covered by the Agreement resulting from this solicitation will be performed on
a time and materials fee basis for a specified scope of work. The term of the agreement will begin July 1, 2022
A sample of the City’s Standard Consulting Agreement (Agreement), including insurance requirements, is provided
as Attachment A.
Attachment 3
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If the interested firm desires to take exception to the Agreement and/or insurance requirements, the interested
firm shall clearly identify proposed changes to the Agreement and furnish the reason for these changes, which
shall be included in the qualification. Exceptions will be taken into consideration in evaluating Proposals.
Otherwise, the interested firm is to state in the proposal that the Agreement and insurance requirements are
acceptable.
Consideration for exceptions will not be considered if not included in the submitted proposal.
Conflict of Interest
Proposer agrees that, for the term of this contract, no member, officer or employee of the City, or of a public body
within Alameda County or member or delegate to the Congress of the United States, during his/her tenure or for
one year thereafter, shall have any direct interest in the contracts or any direct or material benefit arising
therefrom.
Proposers must provide a list of any potential conflicts of interest in working for the City. This must include, but is
not limited to, a list of your firm’s clients who are the following: Private clients located or operating within the
City of Dublin limits, Dublin San Ramon Service District, US Army Camp Parks and/or the County of Alameda, and
a brief description of work for these clients. Proposers must also identify any other clients (including public
entities), that may pose a potential conflict of interest, as well as a brief description of work you provide to these
clients.
This list must include all potential conflicts of interest within the year prior to the release of this RFQ as well as
current and future commitments to other projects.
Principals and those performing work for City of Dublin may be required to submit a California Fair Political
Practices Commission (FPPC) Form 700: Statement of Economic Interests documenting potential financial conflicts
of interest. For additional information, proposers should refer to the FPPC website at
http://www.fppc.ca.gov/Form700.html.
Equal Employment Opportunity
Proposer shall not, on the grounds of race, color, sex, age, religion, national origin, ancestry, physical handicap,
medical condition, or marital status either discriminate or permit discrimination against any employee or applicant
for employment in any manner prohibited by Federal, State or local laws. In the event of Proposer non‐
compliance, the City may cancel, terminate or suspend the Contract in whole or in part. Proposer may also be
declared ineligible for further contracts with the City of Dublin.
Proposer shall take affirmative action to ensure that applicants are employed, and that employees are treated
during their employment, without regard to their race, religion, color, sex, or national origin. Such action shall
include, but not be limited to the following: employment, upgrading, demotion or transfer; recruitment or
recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for
training, including apprenticeship. Proposer and its sub‐consultants shall post in conspicuous places, available to
all employees and applicants for employment, a notice setting forth the following provisions [29 U.S.C. § 623, 42
U.S.C. § 2000, 42 U.S.C. § 6102, 42 U.S.C. § 12112, 42 U.S.C. § 12132, 49 U.S.C. § 5332, 29 CFR Part 1630, 41 CFR
Parts 60 et seq.].
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Governing Law
This RFP summarizes the applicable laws and governance; when in conflict applicable State/Federal guidelines
shall apply. The contract and legal relations between the parties hereto shall be governed and construed in
accordance with the laws of the State of California.
Insurance Requirements
The Consultant shall provide insurance coverage as follows in conformance with the City of Dublin’s requirements:
General Liability Insurance $1,000,000
Automobile Liability Insurance $1,000,000
Professional Liability Insurance $2,000,000
Workers’ Compensation Insurance $1,000,000
Review and Selection Process
The City reserves the right to make the selection based on its sole discretion. A subcommittee selected by City
Staff will evaluate proposals provided in response to this RFP. Informal interviews may be conducted by City staff
and may include more than one firm that has submitted a Proposal.
Based on input from this review process, a recommendation will be made to the City Manager. The City Manager
will make a recommendation to the City Council for award of contract services.
The City reserves the right to award a contract to the firm(s) that the City feels best meets the requirements of
the RFP. The City reserves the right to reject any and all Proposals prior to execution of the Agreement, with no
penalty to the City.
Selection of Consultant
Submitted Proposals will be evaluated and scored using the following criteria:
Qualifications and specific experience of key project team members.
Quality and completeness of the proposal.
Experience with engagement of similar scope and complexity.
Satisfaction of previous clients.
Cost of providing the consultant services for this project.
Attachment 3
265
Attachment A
Standard Consulting Services Agreement
Attachment 3
(Removed for the purposes of the June 21, 2022
Regular City Council Meeting packet)
266
Attachment B
Statement of Investment Policy for the City of Dublin
Attachment 3
267
Attachment 2
Exhibit A
1
STATEMENT OF INVESTMENT POLICY FOR THE CITY OF DUBLIN
I.INTRODUCTION
This Statement of Investment Policy is intended to identify various policies and
procedures that will foster a prudent and systematic investment program designed to
seek the City's objectives of safety, liquidity and return through a diversified investment
portfolio. This policy also serves to organize and formalize the City's investment-related
activities, while complying with all applicable status governing the investment of public
funds.
II.SCOPE
This policy covers all funds and investment activities under the direct authority of the
City of Dublin, as set forth in the State Government Code, sections 53600 et seq.,
excluding any bond- related proceeds or reserves, which are governed by their bond
indentures. Cash held by the City shall be pooled in order to more effectively manage
City cash resources. All pooled funds are accounted for in the City's Comprehensive
Annual Financial Report and include:
Funds
General Fund
Special Revenue Funds
Capital Project Funds
Internal Service Funds
Enterprise Funds
Agency Funds
This original investment policy was adopted by the City of Dublin (the "City"), on
August 21, 2007. This update to the Policy is effective on September 1, 2021 and
replaces any previous versions.
III.OBJECTIVES
The overall program shall be designed and managed with a degree of professionalism
worthy of the public trust. The primary objectives, in order of priority, of the City's
investment activities shall be:
I)Safety: Safety of principal is the foremost objective of the investment program.
The City's investments shall be undertaken in a manner that seeks to safeguard
the principal of the funds under its control by maintaining an appropriate risk
level.
2)Liquidity: The City's investment portfolio will remain sufficiently liquid to enable
the City to meet its reasonably anticipated cash flow requirements.
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2
3) Return: Return should become a consideration only after the basic requirements
of safety and liquidity have been met. The City seeks to attain market average
rate of return on its investments throughout economic cycles, consistent with
constraints imposed by its safety objectives and cash flow considerations.
4) Diversification: The investment portfolio will be diversified to avoid incurring
unreasonable and avoidable risks regarding specific security types or individual
financial institutions. This shall also conform with applicable sections of the
Government Code.
IV. DELEGATION OF AUTHORITY
As authorized in Government Code Section 53607, the City Council delegates the
authority to invest funds of the City to the City Treasurer and/or any duly appointed
Deputy City Treasurer. The City Treasurer and any duly appointed Deputy City
Treasurer shall make all investment decisions and transactions in strict accordance
with State law and this investment policy. The Administrative Services Director shall
be designated as the City Treasurer and the City Manager and/or Assistant
Administrative Services Director shall be designated as the Deputy City Treasurer.
This delegation shall be for a one-year period until the delegation of authority is
revoked or expires. The City Council may renew the authority each year as part of
an annual review of this policy.
The City Treasurer shall establish procedures for the operation of the investment
program. The City Treasurer shall be also responsible for all transactions undertaken
and establishing a system of controls to regulate the activities of subordinates.
The City recognizes that in a diversified portfolio, occasional measured losses may be
inevitable and must be considered within the context of the overall portfolio's return
and the cash flow requirements of the City. Authorized individuals acting in accordance
with written procedures and the investment policy and exercising due diligence shall
be relieved of personal responsibility for an individual security's credit risk or market
price changes, provided deviations from expectations are reported in a timely fashion
and appropriate action is taken to control adverse developments.
The City may engage the services of one or more external investment managers to
assist in the management of the City's investment portfolio in a manner consistent
with the City's objectives. Such external managers may be granted discretion to
purchase and sell investment securities in accordance with this investment policy.
Such managers must be registered under the Investment Advisors Act of 1940.
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V. PRUDENCE
Pursuant to California Government Code Section 53600.3, all persons authorized to
make investment decisions on behalf of the City are trustees and therefore fiduciaries
subject to the prudent investor standard: "When investing, reinvesting, purchasing,
acquiring, exchanging, selling, or managing public funds, a trustee shall act with care,
skill, prudence, and diligence under the circumstances then prevailing, including, but
not limited to, the general economic conditions and the anticipated needs of the agency,
that a prudent person acting in a like capacity and familiarity with those matters would
use in the conduct of funds of a like character and with like aims, to safeguard the
principal and maintain the liquidity needs of the agency."
VI. ETHICS AND CONFLICTS OF INTEREST
All participants in the investment process shall acts as custodians of the public trust.
Investment officials shall recognize that the investment portfolio is subject to public
review and evaluation. The overall program shall be designed and managed with a
degree of professionalism that is worthy of the public trust. Thus employees and officials
involved in the investment process shall refrain from personal business activity that
conflicts with proper execution of the investment program, or impairs their ability to
make impartial investment decisions. Additionally, the City Treasurer and the Deputy
Treasurer shall file applicable financial disclosures as required by the Fair Political
Practices Commission (FPPC).
VII. INTERNAL CONTROLS
The Treasurer is responsible for establishing and maintaining an internal control
structure designed to ensure that the assets of the entity are protected from loss, theft
or misuse. The internal control structure shall be designed to provide reasonable
assurance that these objectives are met. The concept of reasonable assurance
recognizes that (1) the cost of a control should not exceed the benefits likely to be
derived; and (2) the valuation of costs and benefits requires estimates and judgments
by management. Periodically as deemed appropriate by City Management and/or the
City Council an independent analysis by an external auditor shall be conducted to
review internal controls, account activity and compliance with policies and procedures.
VIII. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS
To the extent practical the Treasurer shall endeavor to complete investment
transactions using a competitive bid process whenever possible. It shall be the City's
policy to purchase securities only from authorized institutions and firms. No deposit of
public funds shall be made except in a qualified public depository as established by
state laws.
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Institutions eligible to transact investment business with the City include:
1. Primary government dealers as designated by the Federal Reserve Bank and
non-primary government dealers
2. Nationally or state chartered banks
3. The Federal Reserve Bank
4. Direct issuers of securities eligible for purchase
The Treasurer shall maintain procedures for the establishing a list of authorized
broker/dealers and financial institutions which are approved for investment purposes.
These may include primary or regional dealers that qualify under Securities & Exchange
Commission Rule 15C3-l (uniform net capital rule). The City requires each firm that will
be used for the purchase or sale of securities to be evaluated by the Treasurer prior to
any investments. The firms shall submit current financial statements, and annual
audited financial statements each year thereafter, which are to be evaluated by the
Treasurer. At a minimum, the firm must be financially sound and have been in business
a minimum of three years. In addition, the firms must provide: proof of National
Association of Security Dealers membership, proof of state registration or exemption,
and certificate of having read the City's investment policy.
If an investment adviser is retained by the City, then that adviser will be permitted
to use their own list of approved broker/dealers and financial institutions for investment
purposes.
IX. AUTHORIZED AND SUITABLE INVESTMENTS
The City's investments are governed by Government Code, Sections 53600 et seq.
Within the investments permitted by the Government Code, the City seeks to further
restrict eligible investments to the guidelines listed below. In the event an apparent
discrepancy is found between this Policy and the Government Code, the more restrictive
parameters will take precedence. Percentage holding limits listed in this section apply
at the time the security is purchased. Any investment currently held at the time the
Policy is adopted which does not meet the new Policy guidelines can be held until
maturity, and shall be exempt from the current Policy. At the time of the investment's
maturity or liquidation such funds shall be reinvested only as provided in the most
current Policy.
An appropriate risk level shall be maintained by primarily purchasing securities that
are of high quality, liquid, and marketable. The portfolio shall be diversified by security
type and institution to avoid incurring unreasonable and avoidable risks regarding
specific security types or individual financial institutions.
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1. United States Treasury Issues. United States Treasury notes, bonds, bills, or
certificates of indebtedness, or those for which the faith and credit of the United
States are pledged for the payment of principal and interest. There is no limitation
as to the percentage of the portfolio that may be invested in this category. The
maximum maturity of these securities is five years.
2. Federal Agency Obligations. Federal agency or United States government-sponsored
enterprise obligations, participations, or other instruments, including those issued
by or fully guaranteed as to principal and interest by federal agencies or United
States government- sponsored enterprises. There is no limitation as to the
percentage of the portfolio that may be invested in this category. However, the
portfolio's exposure to any one federal agency issuer is limited to 35 percent of the
overall portfolio. The limit of the overall portfolio's exposure to callable federal agency
securities is 25 percent. The maximum maturity for agency securities is five years.
3. Bankers' Acceptances. Bankers' acceptances, otherwise known as bills of exchange
or time drafts, that are drawn on and accepted by a commercial bank. Bankers'
acceptances must be secured by the irrevocable primary obligation of the accepting
domestic bank. Purchasers are limited to issuers whose short-term debt is rated "A-
1" or higher, or the equivalent, by a Nationally Recognized Statistical-Rating
Organization (NRSRO). Bankers' acceptances cannot exceed a maturity of 180
days. A maximum of 40 percent of the portfolio may be invested in this category.
The amount invested in bankers' acceptances with any one financial institution in
combination with any other debt from that financial institution shall not exceed 20
percent of the portfolio.
4. Commercial Paper. Commercial paper of "prime" quality rated "A-1" or higher, or
the equivalent, by a NRSRO. The entity that issues the commercial paper shall
meet all of the following conditions in either paragraph (A) or paragraph (B):
(A) The entity meets the following criteria: (i) Is organized and operating in the
United States as a general corporation. (ii) Has total assets in excess of five
hundred million dollars ($500,000,000). (iii) Has debt other than commercial
paper, if any, that is rated "A" or higher by a nationally recognized statistical-
rating organization.
(B) The entity meets the following criteria: (i) Is organized within the United States
as a special purpose corporation, trust, or limited liability company. (ii) Has
program wide credit enhancements including, but not limited to, over
collateralization, letters of credit, or surety bond. (iii) Has commercial paper
that is rated "A-1" or higher, or the equivalent, by a nationally recognized
statistical-rating organization.
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Eligible commercial paper shall have a maximum maturity of 270 days or less and
not represent more than 10 percent of the outstanding paper of an issuing
corporation. A maximum of 25 percent of the portfolio may be invested in this
category. Under a provision of the California Government Code sunsetting
on January 1, 2026, no more than 40 percent of the portfolio may be
invested in Commercial Paper if the Agency’s investment assets under
management are greater than $100,000,000. The amount invested in
commercial paper of any one issuer in combination with any other debt from that
issuer shall not exceed 20 percent of the portfolio.
5. Negotiable Certificates of Deposit. Negotiable certificates of deposit (NCDs) issued
by a nationally or state-chartered bank, a savings association or a federal
association, a state or federal credit union, or by a state-licensed branch of a foreign
bank. Purchases are limited to institutions which have long-term debt rated "A" or
better and/or have short-term debt rated at least "A-1" or higher, or the equivalent
by a NRSRO. A maximum of 30 percent of the portfolio may be invested in this
category. The amount invested in NCDs with any one financial institution in
combination with any other debt from that financial institution shall not exceed 20
percent of the portfolio. The maximum maturity of these securities is five years.
6. Time Certificates of Deposit. Time Certificates of Deposit (TCDs) placed with
commercial banks and savings and loans. The purchase of TCDs from out-of-state
banks or savings and loans is prohibited. The amount on deposit shall not exceed
the shareholder's equity in the financial institution. To be eligible for purchase, the
financial institution must have received a minimum overall satisfactory rating for
meeting the credit needs of California Communities in its most recent evaluation, as
provided Government Code Section 53635.2. TCDs are required to be
collateralized as specified under Government Code Section 53630 et. seq. The
Treasurer, at his discretion, may waive the collateralization requirements for any
portion that is covered by federal (FDIC) insurance. The City shall have a signed
agreement with the depository per Government Code Section 53649. The
maximum maturity of these securities may not exceed one (1) year in maturity. A
maximum of 10 percent of the portfolio may be invested in this category.
7. Mutual Funds and Money Market Mutual Funds that are registered with the Securities
and Exchange Commission under the Investment Company Act of 1940, provided
that,
a. MUTUAL FUNDS that invest in the securities and obligations as authorized under
California Government Code, Section 53601 (a) to (k) and (m) to (q) inclusive and
that meet either of the following criteria:
1. Attained the highest ranking or the highest letter and numerical rating provided
by not less than two (2) NRSROs; or
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2. Have retained an investment adviser registered or exempt from registration with
the Securities and Exchange Commission with not less than five years’
experience investing in the securities and obligations authorized by California
Government Code, Section 53601 and with assets under management in excess
of $500 million.
3. No more than 10% of the total portfolio may be invested in shares of any one
mutual fund.
b. MONEY MARKET MUTUAL FUNDS registered with the Securities and Exchange
Commission under the Investment Company Act of 1940 and issued by diversified
management companies and meet either of the following criteria:
1. Have attained the highest ranking or the highest letter and numerical rating
provided by not less than two (2) NRSROs; or
2. Have retained an investment adviser registered or exempt from registration with
the Securities and Exchange Commission with not less than five years’
experience managing money market mutual funds with assets under
management in excess of $500 million.
3. No more than 20% of the total portfolio may be invested in Money Market Mutual
Funds.
c. No more than 20% of the total portfolio may be invested in these securities.
.
8. State of California Local Agency Investment Fund (LAIF). The City may invest
up to the maximum as permitted by LAIF. For due diligence, the Treasurer shall
maintain on file a copy of LAIF's current Answer Book.
9. California Asset Management Program (CAMP). Shares of beneficial interest
issued by a joint powers authority organized pursuant to Government Code Section
6509.7 that invests in the securities and obligations authorized in subdivisions (a)
to (n), inclusive of Government Code Section 53601. For due diligence, the
Treasurer shall maintain on file a copy of CAMP's current Information Statement.
10. Medium Term Notes. Medium-term notes, defined as all corporate and depository
institution debt securities with a maximum remaining maturity of five years or less,
issued by corporations organized and operating within the United States or by
depository institutions licensed by the United States or any state and operating
within the United States. Purchases are limited to securities rated "A" or higher, or
the equivalent, by a NRSRO. A maximum of 30 percent of the City's portfolio may
be invested in this category and a maximum of 5 percent with any one issuer. The
maximum maturity of these securities is five years.
11. Asset-Backed, Mortgage-Backed and Collateralized Mortgage Obligation
Securities. The City may purchase such securities provided that they are rated
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"AA" or higher, or the equivalent, by a NRSRO. Purchase of securities authorized
by this subdivision may not exceed 20 percent of the portfolio, and a maximum of
5 percent per issue. The maximum maturity of these securities is five years.
12. Municipal Securities. Obligations of the State of California, any of the other 49
states, or any local agency within the state of California, may be purchased by
the City provided that long-term obligations are rated "A" or higher, or the
equivalent, by at least one NRSRO. There are no limits on the dollar amount or
percentage that the city may invest in municipal securities; however, investments
in these securities are limited to a maximum of 5 percent with any single issuer. The
maximum maturity of these securities is five years.
13. Supranationals provided that issues are US dollar denominated senior unsecured
unsubordinated obligations issued or unconditionally guaranteed by the International
Bank for Reconstruction and Development, International Finance Corporation, or
Inter-American Development Bank. The securities must be rated in a rating category
of “AA” or its equivalent by a NRSRO. No more than 30% of the portfolio may be
invested in these securities, and no more than 10% of the portfolio may be invested
in any single issuer. The maximum maturity does not exceed five (5) years.
X. AUTHORIZED INVESTMENTS FOR BOND PROCEEDS
Bond proceeds shall be invested in securities permitted by the applicable bond
documents. If the bond documents are silent as to the permitted investments, bond
proceeds will be invested in securities permitted by this Policy. Notwithstanding the
provisions of Policy, the percentage or dollar portfolio limitations listed in elsewhere
in this Policy do not apply to bond proceeds. In addition to the securities listed in
Section IX above, bond proceeds may be invested in structured investment products if
approved by the Treasurer.
XI. PROHIBITED INVESTMENT PRACTICES AND INSTRUMENTS
The City shall not make investments for the purpose of trading or speculation as the
dominate criterion such as anticipation of appreciation of capital value through changes
in market rates. Securities are purchased with the intent to hold to maturity.
Any investment in a security not specifically listed as an Authorized and Suitable
Investment above, but otherwise permitted by the Government Code, is prohibited
without the prior approval of the City Council. Section 53601.6 of the Government Code
specifically disallows investments in invoice floaters, range notes, or interest-only strips
that are derived from a pool of mortgages. Under a provision of the California
Government Code sunsetting on January 1, 2026, securities backed by the United States
Government that could result in a zero or negative interest accrual if held to maturity are
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permitted.
XII. REVIEW OF INVESTMENT PORTFOLIO
The City Treasurer shall periodically, but no less than quarterly, review the portfolio
to identify investments that do not comply with this investment policy and establish
protocols for reporting major and critical incidences of noncompliance to the City
Council.
XIII. TERM OF INVESTMENTS
Funds of the City will be invested in accordance with sound treasury management
principles. It is the objective of this Policy to provide a system which will accurately
monitor and forecast revenues and expenditures so that the City can invest funds to the
fullest extent possible.
The maximum maturity of individual investments shall not exceed the limits set forth
in under Authorized and Suitable Investments. No investment shall exceed a maturity
of five years from the date of purchase unless the City Council has granted express
authority to make that investment either specifically or as a part of an investment
program approved by the City Council no less than three months prior to the investment.
XIV. INVESTMENT RISK
(A) MARKET RISK
Market risk is the risk that the portfolio will decline in value (or will not optimize its
value) due to changes in the general level of interest rates. The City recognizes
that, over time, longer-term portfolios achieve higher returns. On the other hand,
longer-term portfolios have higher volatility of return. The City shall mitigate
market risk by providing adequate liquidity for short-term cash needs, and by
making some longer-term investments only with funds that are not needed for
current cash flow purposes.
The City further recognizes that certain types of securities, including variable rate
securities, securities with principal pay-downs prior to maturity, and securities with
embedded options, will affect the market risk profile of the portfolio differently in
different interest rate environments. The City, therefore, adopts the following
strategies to control and mitigate its exposure to market risk:
1) The maximum stated final maturity of individual securities in the portfolio shall
be five years, unless otherwise stated in this policy;
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2) The City shall maintain a minimum of three months of budgeted operating
expenditures in cash, cash equivalents and short term investments; and
3) The duration of the portfolio will typically be approximately equal to the
duration of a market index, selected by the City as its performance benchmark,
which meets the City's needs for cash flow and level of risk tolerance plus or
minus 20%.
(B) CREDIT RISK
In general, the City's portfolio will be diversified to avoid incurring unreasonable
and avoidable risks regarding specific security types or individual financial
institutions, such as credit risk. Credit risk is the risk that a security or a portfolio
will lose some or all of its value due to a real or perceived change in the ability of
the issuer to repay its debt. The City shall mitigate credit risk by adopting the
following strategies:
I) The diversification requirements included in Section IX are designed to mitigate
credit risk in the portfolio;
2) No more than 5% of the total portfolio may be deposited with or invested in
securities issued by any single issuer unless otherwise specified in this policy.
3) The City may elect to sell a security prior to its maturity and record a capital
gain or loss in order to improve the quality, liquidity or return of the portfolio
in response to market conditions or the City's risk preferences; and
4) If a security owned by the City is downgraded to a level below the requirements
of this policy, making the security ineligible for additional purchases, the
following steps will be taken:
a) Any actions taken related to the downgrade by the investment manager will
be communicated to the City in a timely manner.
b) If a decision is made to retain the security, the credit situation will be
monitored and reported back to the City.
XV. SAFEKEEPING AND CUSTODY
Investment securities are to be purchased when possible in book-entry form in the
City's name. All security transactions entered into by the City shall be conducted on a
delivery-versus-payment (DVP) basis. All cash and securities in the City's portfolio
shall be held in safekeeping in the City's name by a third party bank trust department,
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acting as agent for the City under the terms of a custody agreement executed by the
bank and the City. All investment transactions will require a safekeeping receipt or
acknowledgment generated from the trade. A monthly report will be received by the City
from the safekeeping institution listing all securities held in safekeeping with current
market data and other information. The only exception to the foregoing shall be
depository accounts and securities purchases made with: (i) local government
investment pools; (ii) time certificates of deposit, and, (iii) money mutual funds, since
the purchased securities are not deliverable. Term and non-negotiable instruments,
such as certificates of deposit, can be held by the Treasurer, or in safekeeping as the
Treasurer deems appropriate.
XVI. PERFORMANCE BENCHMARK
The investment portfolio shall be designed to attain a market-average rate of return
throughout budgetary and economic cycles, taking into account the City's risk
constraints, the cash flow characteristics of the portfolio, and state and local laws,
ordinances or resolutions that restrict investments. The Treasurer shall monitor and
evaluate the portfolio's performance relative to market benchmark, which will be included
in the Treasurer's quarterly report. The Treasurer shall select an appropriate, readily
available index to use as a benchmark.
XVII. REPORT INFORMATION
The Treasurer shall prepare a report to the City Council not less than semi-annually
which is available each year within 60 days following December 31st and June 30th. The
semi-annual report shall be presented at a subsequent regularly scheduled City Council
Meeting. The report shall be inclusive of a monthly listing of investment transactions.
At a minimum the report shall include the following (Revised 9-18-2012):
a) Type of Investment
b) Issuer
c) Date of Maturity
d) Par and dollar amount invested
e) Current Market Value as of the date of the report
f) Source of the market value information
g) A list of investment transactions.
h) A statement of compliance with the investment policy
i) A statement as to the ability of the City to meet its expenditure
requirements for the next six months
In addition, the City Treasurer will submit a monthly transaction report to the City Council.
XVIII. REVIEW OF INVESTMENT POLICY
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This policy shall be subject to review by the City Council on an annual basis, by
the second Council meeting in September. Any recommended modifications or
amendments shall be presented by Staff to the City Council for their consideration and
adoption.
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GLOSSARY OF TERMS
ACCRUED INTEREST: Interest earned but not yet received.
AGENCIES: Federal agency securities and/or Government-sponsored enterprises. Examples of
well-known agencies that issue bonds are Federal Home Loan Mortgage Corporation (FHLMC or
"Freddie Mac"), Federal National Mortgage Association (FNMA or "Fannie Mae"), and the Federal
Home Loan Bank.
AMORTIZATION: An accounting practice of gradually decreasing (increasing) an asset's book value
by spreading its depreciation (accretion) over a period of time.
ASKED: The price at which securities are offered.
ASSET BACKED SECURITIES: Securities supported by pools of installment loans or leases or by
pools of revolving lines of credit.
BANKERS' ACCEPTANCE (BA): A draft or bill or exchange accepted by a bank or trust company.
The accepting institution guarantees payment of the bill, as well as the issuer.
BASIS POINT: One basis point is one hundredth of one percent (.0 I ).
BENCHMARK: A comparative base for measuring the performance or risk tolerance of the
investment portfolio. A benchmark should represent a close correlation to the level of risk and the
average duration of the portfolio's investments.
BID PRICE: The price offered by a buyer of securities. (When you are selling securities, you ask for
a bid.) See Offer.
BOND: A financial obligation for which the issuer promises to pay the bondholder a specified stream
of future cash flows, including periodic interest payments and a principal repayment.
BOOK ENTRY: The system maintained by the Federal Reserve, by which most money market
securities are delivered to an investor's custodial bank. The Federal Reserve maintains a
computerized record of the ownership of these securities and records any changes in ownership
corresponding to payments made over the Federal Reserve wire (delivery versus payment.)
BOOK VALUE: The value at which a debt security is shown on the holder's balance sheet. Book
value is acquisition cost less amortization of premium or accretion of discount.
BROKER: A broker brings buyers and sellers together for a commission.
CALLABLE BOND: A bond issue in which all or part of its outstanding principal amount may be
redeemed before maturity by the issuer under specified conditions.
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CALL PRICE: The price at which an issuer may redeem a bond prior to maturity. The price is
usually at a slight premium to the bond's original issue price to compensate the holder for loss of
income and ownership.
CALL RISK: The risk to a bondholder that a bond may be redeemed prior to maturity.
CERTIFICATE OF DEPOSIT (CD): A deposit insured up to $100,000 by the FDIC at a set rate
for a specified period of time.
COLLATERAL: Securities, evidence of deposit or other property which a borrower pledges to
secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public
monies.
COLLATERALIZED MORTGAGE OBLIGATION (CMO): Classes of bonds that redistribute the
cash flows of mortgage securities (and whole loans) to create securities that have different levels of
prepayment risk, as compared to the underlying mortgage securities.
COMMERCIAL PAPER: An unsecured promissory note of industrial corporations, utilities and bank
holding companies having assets in excess of $500 million and an "A" or higher rating for the
issuer's debentures. Interest is discounted from par and calculated using the actual number of days
on a 360-day year. The notes are in bearer form, mature from one to 270 days and generally start
at $100,000. There is a secondary market for commercial paper and an investor may sell them prior
to maturity. Unused lines of credit back commercial paper from major banks.
COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR): The official annual financial report for
the City. It includes combined statements and basic financial statements for each individual fund and
account group prepared in conformity with Generally Accepted Accounting Principles (GAAP).
Supplemental information is also included including a detailed multi-year comparative statistics.
COST YIELD: The annual income from an investment divided by the purchase cost. Because it
does not give effect to premiums and discounts which may have been included in the purchase cost,
it is an incomplete measure of return.
COUPON: (a) The annual rate of interest that a bond's issuer promises to pay the bondholder on
the bond's face value. (b) A certificate attached to a bond evidencing interest due on a payment date.
CREDIT RISK: The risk that principal and/or interest on an investment will not be paid in a timely
manner due to changes in the condition of the issuer.
CURRENT YIELD: The interest paid on an investment expressed as a percentage of the current
price of the security.
CUSTODY: A banking service that provides safekeeping for the individual securities in a customer's
investment portfolio under a written agreement which also calls for the bank to collect and pay out
income, and to buy, sell, receive and deliver securities when ordered to do so by the account holder.
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DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling
for his own account.
DEBENTURE: A bond secured only by the general credit of the issuer.
DELIVERY VERSUS PAYMENT (DVP): Delivery versus payment is delivery of securities with an
exchange of money for the securities.
DERIVATIVES: (1) Financial instruments whose return profile is linked to, or derived from, the
movement of one or more underlying index or security, and may include a leveraging factor, or (2)
financial contracts based upon notional amounts whose value is derived from an underlying index or
security (interest rates, foreign exchange rates, equities or commodities).
DISCOUNT: The difference between the cost price of a security and its value at maturity when
quoted at lower than face value.
DISCOUNT SECURITIES: Non-interest bearing money market instruments that are issued a discount
and redeemed at maturity for full face value, e.g., U.S. Treasury Bills.
DIVERSIFI CATI0N: Dividing investment funds among a variety of securities
offering independent returns.
DURATION: A measure of the timing of the cash flows, such as the interest payments and the
principal repayment, to be received from a given fixed-income security. This calculation is based on
three variables: term to maturity, coupon rate, and yield to maturity. The duration of a security is
a useful indicator of its price volatility for given changes in interest rates.
FEDERAL CREDIT AGENCIES: Agencies of the Federal government set up to supply credit to
various classes of institutions and individuals, e.g., S&L's, small business firms, students, farmers,
farm cooperatives, and exporters.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that insures bank
deposits, currently up to $100,000 per deposit.
FEDERAL FUNDS RATE: The rate of interest at which Fed funds are traded. This rate is currently
pegged by the Federal Reserve through open-market operations.
FEDERAL HOME LOAN BANKS (FHLB): Government sponsored wholesale banks (currently 12
regional banks) which lend funds and provide correspondent banking services to member commercial
banks, thrift institutions, credit unions and insurance companies.
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA or Fannie Mae): FNMA, like GNMA
was chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal
corporation working under the auspices of the Department of Housing and Urban Development (HUD).
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The corporation is called, is a private stockholder-owned corporation. The corporation's purchases
include a variety of adjustable mortgages and second loans, in addition to fixed-rate mortgages.
FEDERAL OPEN MARKET COMMITTEE (FOMC): Consists of seven members of the Federal
Reserve Board and five of the twelve Federal Reserve Bank Presidents. The President of the New
York Federal Reserve Bank is a permanent member, while the other Presidents serve on a rotating
basis. The Committee periodically meets to set Federal Reserve guidelines regarding purchases
and sales of Government Securities in the open market as a means of influencing the volume of
bank credit and money.
FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and
consisting of a seven member Board of Governors in Washington, D.C., 12 regional banks and about
5,700 commercial banks that are members of the system.
FED WIRE: A wire transmission service established by the Federal Reserve Bank to facilitate the
transfer of funds through debits and credits of funds between participants within the Fed system.
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC or Freddie Mac): A United States
government sponsored corporation.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA or Ginnie Mae): Securities
influencing the volume of bank credit guaranteed by GNMA and issued by mortgage bankers,
commercial banks, savings and loan associations, and other institutions. Security holder is protected
by full faith and credit of the U.S. Government. Ginnie Mae securities are backed by the FHA, VA
or FmHA mortgages. The term "pass- throughs" is often used to describe Ginnie Maes.
HAIRCUT: The margin or difference between the actual market value of a security and the value
assessed by the lending side of a transaction (i.e. a repo).
INTEREST RATE: The annual yield earned on an investment, expressed as a percentage.
LEVERAGE: Borrowing funds in order to invest in securities that have the potential to pay earnings
at a rate higher than the cost of borrowing.
LIQUIDITY: Refers to the ability to easily and rapidly convert a security into cash.
LOCAL AGENCY INVESTMENT FUND (LAIF): The local Agency Investment Fund (LAIF) is a
special fund in the California State Treasury created and governed pursuant to Government Code
Sections 16429.1 et seq. There are limits on the maximum dollars deposited by a city as well as the
number of transactions allowed each month.
LOCAL GOVERNMENT INVESTMENT POOL (LGIP): The aggregate of all funds from political
subdivisions that are placed in custody of the State Treasurer for investment and reinvestment.
MAKE WHOLE CALL: A type of call provision on a bond that allows the issuer to pay off the
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remaining debt early. Unlike a call option, with a make whole call provision, the issuer makes a lump
sum payment that equals the net present value (NPV) of future coupon payments that will not be
paid because of the call. With this type of call, an investor is compensated, or "made whole."
MARGIN: The difference between the market value of a security and the loan a broker makes using
that security as collateral.
MARKET RISK: The risk that the value of securities will fluctuate with changes in overall market
conditions or interest rates.
MARKET VALUE: The price at which a security is trading and could presumably be purchased or
sold on a specific date.
MARKING TO MARKET: The process of posting current market values for securities in a portfolio.
MATURITY: The date upon which the principal or stated value of an investment becomes due and
payable.
MEDIUM TERM NOTES (MTNs): Unsecured, investment-grade senior debt securities of major
corporations which are sold in relatively small amounts on either a continuous or an intermittent
basis. MTNs are highly flexible debt instruments that can be structured to respond to market
opportunities or to investor preferences.
MODIFIED DURATION: The percent change in price for a 100 basis point change in yields. Modified
duration is the best single measure of a portfolio's or security's exposure to market risk.
MONEY MARKET: The market in which short-term debt instruments (T-bills, discount notes,
commercial paper, and banker's acceptances) are issued and traded.
MONEY MARKET MUTUAL FUND: Mutual funds that invest solely in money market instruments
(short- term debt instruments, such as Treasury bills, commercial paper, bankers' acceptances, and
federal funds).
MORTGAGE PASS THROUGH SECURITIES: A securitized participation in the interest and
principal cash flows from a specified pool of mortgages. Principal and interest payments made on
the mortgages are passed through to the holder of the security.
MUNICIPAL SECURITIES: Securities issued by state and local agencies to finance capital and
operating expenses.
MUTUAL FUND: An entity which pools the funds of investors and invests those funds in a set of
securities which is specifically defined in the fund's prospectus. Mutual funds can be invested in
various types of domestic and/or international stocks, bonds, and money market instruments, as
set forth in the individual fund's prospectus. For most large, institutional investors, the costs
associated with investing in mutual funds are higher than the investor can obtain through an
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individually managed portfolio.
NATIONAL ASSOCIATION OF SECURITIES DEALERS (NASD): A self-regulatory organization
(SRO) of brokers and dealers in the over-the-counter securities business. Its regulatory mandate
includes authority over firms that distribute mutual fund shares as well as other securities.
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATIONS (NSROs); Credit rating
agencies whose ratings are permitted to be used for regulatory purposes such as those imposed by
the Securities and Exchange Commission.
NEGOTIABLE CERTIFICATE OF DEPOSIT: A large denomination certificate of deposit which can
be sold in the open market prior to maturity.
NEW ISSUE: Term used when a security is originally "brought" to market.
OFFER: The price asked by a seller of securities. (When you are buying securities, you ask for an
offer.) See Asked and Bid.
OPEN MARKET OPERATIONS: Purchases and sales of government and certain other securities
in the open market by the New York Federal Reserve Bank as directed by the FOMC in order to
influence the volume of money and credit in the economy. Purchases inject reserves into the bank
system and stimulate growth of money and credit; sales have the opposite effect. Open market
operations are the Federal Reserve' s most important and most flexible monetary policy tool.
PORTFOLIO: Collection of securities held by an investor.
PREMIUM: The amount by which the price paid for a security exceeds the security's par value.
PREPAYMENT SPEED: A measure of how quickly principal is repaid to investors in mortgage
securities.
PREPAYMENT WINDOW: The time period over which principal repayments will be received on
mortgage securities at a specified prepayment speed.
PRIMARY DEALER: A group of government securities dealers who submit daily reports of market
activity and positions and monthly financial statements to the Federal Reserve Bank of New York
and are subject to its informal oversight. Primary dealers include Securities and Exchange
Commission (SEC)-registered securities broker-dealers, banks, and a few unregulated firms.
PRINCIPAL: The face value or par value of a debt instrument, or the amount of capital invested
in a given security.
PRUDENT PERSON (PRUDENT INVESTOR) RULE: A standard of responsibility which applies to
fiduciaries. In California, the rule is stated as "Investments shall be managed with the care, skill,
prudence and diligence, under the circumstances then prevailing, that a prudent person, acting in
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a like capacity and familiar with such matters, would use in the conduct of an enterprise of like
character and with like aims to accomplish similar purposes."
PURCHASE DATE: The date in which a security is purchased for settlement on that or a later date.
RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current
market price. This may be the amortized yield to maturity on a bond or the current income return.
REALIZED YIELD: The change in value of the portfolio due to interest received and interest earned
and realized gains and losses. It does not give effect to changes in market value on securities,
which have not been sold from the portfolio.
REGIONAL DEALER: A financial intermediary that buys and sells securities for the benefit of its
customers without maintaining substantial inventories of securities and that is not a primary dealer.
REPURCHASE AGREEMENT (RP OR REPO): A holder of securities sells these securities to an
investor with an agreement to repurchase them at a fixed price on a fixed date. The security "buyer"
in effect lends the "seller" money for the period of the agreement, and the terms of the agreement
are structured to compensate him for this.
RULE 2a-7 OF THE INVESTMENT COMPANY ACT: Applies to all money market mutual funds
and mandates such funds to maintain certain standards, including a 13- month maturity limit and
a 90-day average maturity on investments, to help maintain a constant net asset value of one dollar
($1.00).
SAFEKEEPING: See CUSTODY.
SECONDARY MARKET: A market made for the purchase and sale of outstanding issues following
the initial distribution.
SECURITIES & EXCHANGE COMMISSION: Agency created by Congress to protect investors m
securities transactions by administering securities legislation.
SETTLEMENT DATE: The date on which a trade is cleared by delivery of securities against funds.
STRUCTURED NOTE: A complex, fixed income instrument, which pays interest, based on a
formula tied to other interest rates, commodities or indices. Examples include inverse floating rate
notes which have coupons that increase when other interest rates are falling, and which fall when
other interest rates are rising, and "dual index floaters," which pay interest based on the relationship
between two other interest rates - for example, the yield on the ten-year Treasury note minus the
Libor rate. Issuers of such notes lock in a reduced cost of borrowing by purchasing interest rate
swap agreements.
TENNESSEE VALLEY AUTHORITY (TVA): The Tennessee Valley Authority provides flood control
and power and promotes development in portions of the Tennessee, Ohio, and Mississippi River
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valleys. TVA currently issues discount notes and bonds.
TIME CERTIFICATE OF DEPOSIT: A non-negotiable certificate of deposit which cannot be sold
prior to maturity.
TOTAL RATE OF RETURN: A measure of a portfolio's performance over time. It is the internal
rate of return, which equates the beginning value of the portfolio with the ending value; it includes
interest earnings, realized and unrealized gains, and losses in the portfolio.
TREASURY BILLS: A non-interest bearing discount security issued by the U.S. Treasury to finance
the national debt. Most bills are issued to mature in three months, six months, or one year and are
sold on a discount basis.
TREASURY BONDS: Long-term coupon-bearing U.S. Treasury securities issued as direct
obligations of the U.S. Government and having initial maturities of more than 10 years.
TREASURY NOTES: Medium-term coupon-bearing U.S. Treasury securities issued as direct
obligations of the U.S. Government and having initial maturities of I to 10 years.
U.S. GOVERNMENT AGENCIES: Instruments issued by various US Government Agencies most
of which are secured only by the credit worthiness of the particular agency.
VOLATILITY: The rate at which security prices change with changes in general economic
conditions or the general level of interest rates.
WEIGHTED AVERAGE MATURITY (WAM): The average maturity of all the securities that comprise
a portfolio that is typically expressed in days or years.
YIELD: The rate of annual income return on an investment, expressed as a percentage. It is
obtained by dividing the current dollar income by the current market price of the security.
YIELD TO MATURITY: The rate of income return on an investment, minus any premium or plus
any discount, with the adjustment spread over the period from the date of purchase to the date of
maturity of the bond, expressed as a percentage.
YIELD CURVE: The yield on bonds, notes or bills of the same type and credit risk at a specific
date for maturities up to thirty years.
ZERO-COUPON SECURITY: Security that is issued at a discount and makes no periodic interest
payments. The rate of return consists of a gradual accretion of the principal of the security and is
payable at par upon maturity.
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