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PRESENTATION OF THE QUARTERLY INVESTMENT REPORT FOR QUARTER ENDED MARCH 31, 2016, AND MARKET OUTLOOK FOR FISCAL YEAR 2016-17 BY CHANDLER ASSET MANAGEMENT
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RECOMMENDATION
There is no recommended action. This item is informational only.
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Summary
Chandler Asset Management manages the City’s investment portfolio. The Quarterly Investment Report for the Quarter Ended March 31, 2016, was accepted by the City Council on April 26, 2016. Staff has invited Chandler Asset Management to provide a presentation regarding the City’s investment holdings and practices including next year’s market outlook. This action is consistent with the City Council’s commitment to transparency and fiscal prudency.
As of March 31, 2016, the City’s investment portfolio had a market value of approximately $409.9 million. The portfolio’s assets are reflective of the cash balances in all of the City’s funds which include the General Fund, Special Revenue Funds, Enterprise Funds, Agency Fund and other funds. Management of the portfolio ensures the funds are wisely invested, available for expenditures when necessary, and earning at market rates.
DISCUSSION
Background
On April 26, 2016, the City Council accepted by motion the Quarterly Investment Report for Quarter Ended March 31, 2016 (Attachment A). The document is also available to the public on the City’s website at: http://www.stocktongov.com/government/departments/adminServices/finInv.html
The California Government Code (section 53646) and the City’s Investment Policy (No. 700-7) define the manner in which the portfolio is operated to achieve its goals of safety, liquidity, and yield.
Chandler Asset Management serves the City by providing specialized investment portfolio management services. Staff collaborates closely with Chandler Asset Management to monitor the status of the City’s investment portfolio and its returns.
Present Situation
The City’s investment portfolio was approximately $409.9 million (market value) on March 31, 2016. The investment portfolio is divided between Liquid and Reserve portions with the Reserve portion representing the long-term assets managed by Chandler Asset Management. Total returns on the consolidated portfolio for the first quarter of calendar year 2016 were $4.65 million or 1.17% (Attachment A, page 27). This valuation includes funds from all activities, restricted and unrestricted, and includes changes in fair market value and before pool expenses.
The performance of the Reserve portion of the portfolio managed by Chandler Asset Management is benchmarked against the Bank of America Merrill Lynch index of 1-5 year government securities. Over the last year, the Reserve portion of the City's long-term portfolio outperformed the benchmark by 0.15%. The result was an annual return of 1.76% versus the 1.61% achieved by the benchmark (Attachment A, page 22). Annualized quarterly returns for the portion of the portfolio managed by Chandler Asset Management are affected by changes in fair market value.
FINANCIAL SUMMARY
There is no financial impact associated with this information item.
Attachment A - Accepted Quarterly Investment Report for Quarter Ended March 31, 2016