Item 44 - Annual Statement of Investment Policy

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July 1, 2023 - June 30, 2024 City of Santa - Annual Statement of Investment Policy Page 17 collateral is letters of credit drawn on the Federal Home Loan Bank (FHLB). The Treasurer may waive, at his/her discretion, security for that portion of a deposit which is insured pursuant to federal law. Currently, the first two-hundred, fifty-thousand dollars ($250,000) of a deposit is federally insured. 12.0 SAFEKEEPING AND CUSTODY 12.1 Perfected Interest and Delivery versus Payment In accordance with California Government Code Section 53601, to protect against potential losses caused by collapse of individual securities dealers, all securities owned by the City, except securities used as collateral for repurchase agreements, shall be kept in safekeeping with "perfected interest" by the City’s custodial bank or a third party bank trust department, acting as agent for the City under the terms of a custody agreement executed by the bank and by the City. Perfected interest refers to establishment of a superior ownership right in and legal control over the securities assets held by the bank custodian on the City’s behalf and is intended to protect the City from the custodial bank’s own creditors in the event of a bank default and filing for bankruptcy. All securities, excepting investments which are not deliverable (such as LAIF, California CLASS Prime Fund, direct time certificates of deposit, and money market mutual funds), will be received and delivered using standard “delivery versus payment”. Delivery versus payment refers to delivery of securities with an exchange of money for the securities at the time of delivery, rather than delivery of securities with an exchange of a signed receipt for the securities. 13.0 DIVERSIFICATION The purpose of diversification is to reduce overall portfolio risk while attaining market rates of return and to enable the City to meet all anticipated cash requirements. The investment portfolio shall consist of various types of securities approved by state statute and this Statement of Investments Policy. Investments shall vary in issuers, asset classes, industries and maturities to meet City’s financial obligations. Diversifying the investment portfolio will help mitigate the loss of funds as a result of failure of any one issuer. Investments shall further be diversified between structures and imbedded options within the security. The investments shall be diversified by: • Limiting investments to avoid over-concentration in securities of a specific issuer (excluding treasury bills). • Limiting investment in securities that have higher credit risks. • Limiting certificates of deposit to the maximum federally insured amount. • Investing in securities with varying maturities. • Investing a minimum percentage of the total portfolio as established by the FMSA Investment Advisory Committee in highly marketable short-term treasuries, checking accounts with interest, government pooled account, or a combination of all three (See Section 4.1 (A)(iv)).