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CITY OF REDWOOD CITY <br />INVESTMENT POLICY <br /> draft update: 8/28/17 2 <br /> <br />“…all governing bodies of local agencies or persons authorized to make investment <br />decisions on behalf of those local agencies investing public funds pursuant to this <br />chapter are trustees and therefore fiduciaries subject to the prudent investor <br />standard. When investing, reinvesting, purchasing, acquiring, exchanging, selling, or <br />managing public funds, a trustee shall act with care, skill, prudence, and diligence under <br />the circumstances then prevailing, including, but not limited to, the general economic <br />conditions and the anticipated needs of the agency, that a prudent person acting in <br />a like capacity and familiarity with those matters would use in the conduct of funds <br />of a like character and with like aims, to safeguard the principal and maintain the <br />liquidity needs of the agency. Within the limitations of this section and considering <br />individual investments as part of an overall strategy, investments may be acquired as <br />authorized by law.” <br /> <br />B. The investment securities are purchased with the intention to hold until maturity. Sale of <br />securities prior to maturity is permitted where it serves the City’s investment objectives. <br /> <br />IV. Objectives <br /> <br />A. The City’s investment philosophy sets the tone for the policies, practices, procedures and <br />objectives that control the investment function. The investment of funds will be guided by the <br />primary objectives of safety, liquidity, and a reasonable market rate of return, in this order of <br />priority. <br /> <br />1. Safety – Safety of principal is the foremost objective of the investment program. The City <br />will undertake investments in a manner that ensures the preservation of capital in the <br />portfolio taken as a whole. To ensure the safety of principal, the City will seek to minimize <br />credit risk (defined as the risk of default on the part of the issuer of a security) by <br />diversification and by investing in high quality investments and also to minimize market risk <br />(defined as the risk of fluctuations in the market value of securities) by limiting the weighted <br />average maturity of the investment portfolio to 3 years. <br />2. Liquidity – The City will maintain sufficient cash and short-term investment instruments <br />which, together with projected revenues, will provide sufficient liquidity to meet all cash <br />flow requirements which might be reasonably anticipated including contingencies for six <br />months. <br />3. Return on Investment (Yield) – The City’s investment portfolio will be designed with the <br />objective to attain a market rate of return throughout economic cycles, commensurate <br />with the City’s investment risk constraints and the cash flow characteristics of the portfolio. <br /> <br />B. The investment function will have the ongoing objectives of assuring compliance with Federal, <br />State and local laws governing the investment of public funds, providing for short term and <br />long term cash flow needs, and establishing appropriate standards and limits for the type <br />of investments made and the issuers of such investments. <br /> <br />V. Delegation of Authority <br /> <br />A. The City of Redwood City Municipal Code Section 2.33.1 specifies that the City Council will <br />appoint the City Treasurer (Assistant City Manager of Administrative Services). The Treasurer <br />6.1.B. - Page 28