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Services Provie PORTFOLIO MANAGEMENT Meeder wil I develop a strategy that takes into consideration the liquidity needs of the City as well as the current market environment to create a custom portfolio for the City. This portfolio will shift amongst various asset classes as opportunities present themselves in the market, as well as adjusting the duration of the portfolio in accordance with current market conditions. After looking at Santa Ana's 2023 audited financials, we recommend the following: NON -CALLABLE SECURITIES As of 2023, the portfolio has approximately$205,000,000 in callable securities. With interest rates projected to be at the beginning of a downtrend trend as inflation stabilizes, and the Federal Reserve ("Fed") is projected to cut rates in 2024, the portfolio would benefit from locking in non -callable securities. OVERNIGHT OPTIONS Santa Ana holds$130,811,141 in Local Agency Investment Fund ("LAIF'). Compared to the other Joint Powers Authority investment pools, LAIF is underperforming as its strategy is of a longer duration. We recommend placing funds with higher liquidity needs in overnight funds paying higher interest than LAIF. If and when the Fed cuts, there may be an inflection point that LAIF outperforms the other pools. At that time, we would recommend moving liquid funds back over to LAIF. DIVERSIFICATION Santa Ana holds 25% in LAIF, 72% in Agencies, 2% in Treasuries, and 1% in Negotiable CDs. We recommend utilizing a broader mix of securities that are allowed under California Government Code 53600 that will not only help with liquidity needs and swap opportunities but also help elevate the opportunity to increase yield. Some notable security classes recommended to incorporate into the portfolio are Medium Term Notes(Corporate bonds,) State Obligations, and Commercial Paper. RIGHT -SIZING Santa Ana holds about 25%of its funds in LAIF; we recommend providing the City with a detailed cash flow analysis to help determine the optimal amount of funds invested in a longer -term securities and determine if we can lessen the amount held in LAIF/ JPA pools as data shows the income benefits of keeping funds invested longer term overtime compared to ashort-term pool. [Ji_� M E E D E R PUBLIC PYNOS ACTIVE MANAGEMENT SAFETY Meeder's investment process provides safety by limiting investments to high -quality fixed income securities issued by the US Treasury, US Government agencies and instrumentalities, and high -quality commercial paper and credit issuers. Issuer -specific research on credit issuers/commercial paper issuers provides additional levels of due diligence by providing only the highest - quality issuers. BEST EXECUTION Meeder's extensive dealer network is used by its trading desk to source and execute all investment transactions. Meeder's trading desk searches for and executes investment transactions at the best price/highest yield for each client, based on the needs of the portfolio and the relative value of each asset class. LIQUIDITY Meeder structures investment portfolios to ensure funds are available to meet day-to-day operating expenses, together with future expenditures. Funds are invested using a combination of securities that balances the need for liquidity while maximizing return. Portfolios are monitored dynamically to ensure the proper balance between invested balances and cash or equivalents, such as third -party money market mutual funds. With a regular flow of maturities in the portfolio serving as backup liquidity, Meeder keeps the portfolio fully invested in order to maximize income without sacrificing available liquidity. PERFORMANCE MONITORING The portfolio strategy is reviewed daily to ensure it remains aligned with market conditions. Formal investment policy and strategy meetings are conducted monthly or as needed to ensure strategy is tracking with the economic environment. Regular discussions are also scheduled based on marketplace developments and events. COMPLIANCE MONITORING Meeder employs an industry -leading compliance monitoring and reporting system, Charles River. This compliance suite supports compliance rule -building, testing and maintenance, customizable reporting, and a complete audit history. A powerful data administration facility helps monitor and improve data quality. The scalable compliance engine supports high volumes of trades and compliance rules. This allows Meeder to ensure full legality with the entity's investment policy, state codes, GASB and GAAP report standards, and other applicable laws, rules, and regulations. City Council 22 — 15 5/7/2024