55D - RESO - INVESTMENT POLICY - Laserfiche WebLink

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CITY OF SANTA ANA STATEMENT OF INVESTMENT POLICY JULY 1, 2017—JUNE 30, 2018 Page 3 3. YIELD - The City's Fund shall be designed with the objective of attaining a market -average rate of return throughout budgetary and economic cycles taking into account the investment risk constraints and liquidity needs. The market -average rate of return is defined as the average return on three-month U.S. Treasury Bills. Return on investment is of least importance compared to the safety and liquidity objectives described above. The core of investments is limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. It is the general policy of the City to hold investments until market value equals or exceeds amortized cost or book value of the security. Securities shall not be sold prior to maturity with the following exceptions: 1) a declining credit security could be sold early to minimize loss of principal; 2) a simultaneous purchase of a security and the sale of another (security swap) to enhance the quality, yield, or target duration in the portfolio; or 3) general liquidity needs of the portfolio require that the security be sold; 4) prepayment of a specific City debt or contribution servicing obligation (when. financially advantageous to City); and 5) a sale of a specific security prior to its maturity and a capital gain or loss recorded in order to improve the credit quality, liquidity, or rate of return of the portfolio in response to market conditions and/or City risk preferences. The City strives to maintain one hundred percent (100%) investment of idle funds after consideration for a compensating balance to cover the cost of services provided by the bank. The funds available for investment are determined by cash flow projections updated daily. Investments are monitored so that legal limits on types of investments are not exceeded. PRUDENT INVESTOR STANDARD: The City investment program shall be managed in a professional and prudent manner worthy of the public trust and review. The standard of prudence to be used by City investment officials shall be the "prudent investor rule" standard and shall be applied in the context of managing the overall investment portfolio. The "prudent investor rule" provides, pursuant to California Government Code Section 53600.3, that investments shall be made with judgment and care. When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the 55D-10