HomeMy WebLinkAbout02 - CC-3 - Investment Management Services Update - 4/15/2014CITY COUNCIL AGENDA REPORT
MEETING DATE: APRIL 15, 2014
SUBJECT: INVESTMENT MANAGEMENT SERVICES UPDATE
DATE: MARCH 27, 2014
ITEM NUMBER:
FROM: FINANCE DEPARTMENT
PRESENTATION BY: STEPHEN DUNIVENT, INTERIM FINANCE DIRECTOR
FOR FURTHER INFORMATION CONTACT: COLLEEN O'DONOGHUE, ASST. FINANCE
DIRECTOR (714) 754-5219
RECOMMENDATION
Receive and file.
BACKGROUND
For many years the City Treasurer/Finance Director has managed the City's investment
portfolio. As per Government Code Section 53600.5 and the City's investment policy, the
goals while investing City funds are 1.) safety, 2.) liquidity and 3.) yield.
During the last few years with staff reductions and increased workloads, it had become
increasingly clear that the City's portfolio could benefit from full time expert management
by a professionally managed investment firm. During the last five years of an economic
recessionary period, the Federal Government has kept interest rates historically low,
making investing City funds and diversifying the portfolio very difficult. Many investments
that could garner the City a higher yield, come with a slight amount of risk. Contracting
the management of the City's portfolio helps manage the exposure to riskier investments
(safety) while increasing the total return of the portfolio (yield).
On June 18, 2013, the City Council approved an investment management contract with
Chandler Asset Management after an extensive request for proposal solicitation and
evaluation process and unanimous support by the Finance Advisory Committee.
ANALYSIS
Chandler's investment philosophy for the portfolio is to maintain a conservatively
balanced portfolio that is focused on safety and liquidity first, then yield. This philosophy
helps manage the portfolio in both increasing and decreasing interest rate environments.
Additional benefits of contracting with Chandler include:
• Proprietary software to ensure all transactions meet State Code and the City's
Investment Policy guidelines,
• Consistent and focused attention to the portfolio,
• Access to market resources such as Bloomberg, Trade Web and proprietary
optimizing models,
• Volume pricing optimization on transactions and other services,
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• Monthly online reporting and monitoring tools for all transactions and current
balances,
• Continuity of the investment program regardless of changes or fluctuations in
staffing levels or City personnel,
• On-call pro -active staff ready to provide expert advice on questions, investment
transaction decisions and financial market conditions.
Under Chandler's management, the City's total rate of return (1.54%) has exceeded the
one to five year Government Treasury/Agency Benchmark (0.99%).
LEGAL REVIEW
Not required.
CONCLUSION
Staff is pleased with Chandler's investment expertise and guidance, their availability and
timely input and reports have increased the efficiency of the City's Treasury Management
Division.
STEPHEN DUNIVENT
Interim Finance Director/Treasurer
Attachments:
1. February 2014 Treasurer's Report
COLLEEN O'DONOGHUE
Assistant Finance Director
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