Title
Resolution to Adopt Revised Investment Policy
Memorandum
The City’s investment policy currently in effect was adopted in 2007. After reviewing the policy with our investment advisor and various members of the Investment Policy Committee of the Association of Public Treasurers of the United States & Canada (APTUSC), some modifications are recommended. Below is a summary of the material changes to the policy.
Maximum maturity horizons amended as follows:
· U.S. Treasury Obligations extended from seven to fifteen years
· Federal Agency Securities extended from seven to ten years
· Federal Instrumentality Securities extended from seven to ten years
· Certificates of Deposit extended from three to five years
· Obligations of the State of Michigan extended from three to ten years
Portfolio restrictions amended as follows:
· Federal Instrumentality Securities limited from no restriction to a maximum of 65% of the portfolio and maximum of 30% in any one issuer
· Certificates of Deposit limited from no restriction to a maximum of 5% of the portfolio in any one issuer
· Obligations of the State of Michigan limited from no restriction to a maximum of 3% of the portfolio in any one issuer
· Prime Commercial Paper limited from a maximum of 50% of the portfolio to a maximum of 25% of the portfolio
· No more than 25% of the portfolio may be invested in securities with maturities exceeding seven years
· No more than 12.5% of the portfolio may be invested in securities with maturities exceeding eleven years
· Maximum weighted average final maturity increased from 3.5 to 6.5 years
The justification for these policy changes is twofold. First, the extension of maximum maturity horizons will allow us to structure our portfolio to be less reactive to market volatility, improve yields relative to current practices, and retain safety of principal. Second, the amended restrictions reduce the concentration risk of the portfolio by ensuring appropriate diversification and ens...
Click here for full text