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<br />portfolio as of December 31 was $281,690,626. This includes the funds held in the San Mateo County
<br />Treasurer's investment pool and with the State Treasurer's investment pool. All of these investments
<br />comply with the City's investment policy. The City has sufficient liquid resources available to meet
<br />expenditure requirements for the next six months.
<br />The portion of the City's portfolio that is managed by PFM has a total market value of $164,342,591. As
<br />of December 31, the portfolio was earning an annual yield at cost of 2.35%, and the yield at market was
<br />1.75%. The average maturity of the portfolio was 2.76 years.
<br />The market benchmark, selected with consultation from the City Council Finance/Audit Subcommittee, is
<br />the Bank of America Merrill Lynch (BofA ML) 1-5 year U.S. Treasury Index. Below is a table summarizing
<br />the City's portfolio performance compared to the benchmark, for the period ending December 31, 2019.
<br />The coronavirus has reached the U.S., and several states, including California, have issued "stay at home"
<br />orders designed to limit person-to-person contact and thus the spread of the virus. What began as a
<br />health crisis has spilled over to affect businesses, the financial markets, and economies across the globe.
<br />In March 2020, PFM issued a Special Report—Federal Reserve Acts Boldly to Support Economic Growth—
<br />and they shared that the Fed held a special meeting on March 15 to lower the fed funds target rate by
<br />another 1.00%, bringing the target range to 0% - 0.25%. This was a meaningful move, but unfortunately
<br />didn't ease the mind of market participants. Equity markets continued to plummet; the S&P 500 fell below
<br />2,200 the week of March 23, its lowest level since December 2016, before bouncing back 10% over the
<br />past few days. Earlier this same week, the Fed introduced further measures to support liquidity and the
<br />availability of credit in the financial system, including unlimited purchases of Treasuries and agency
<br />mortgage-backed securities (or MBS), and the ability to buy corporate debt for the first time ever. Recent
<br />optimism in the markets built off Fed actions and the $2+ trillion stimulus package aimed at supporting
<br />both individuals and business to limit the economic impact being witnessed in the U.S.
<br />Funds flowing from the equity markets in recent weeks have sought the safe haven of US Treasury
<br />securities, causing their yields to decline. In fact, 1- and 3 -month Treasury bills are trading in negative
<br />territory. Non-governmental sectors have seen significant spread widening.
<br />In terms of the portfolio, the City's portfolio is conservatively managed. As of March 25th, 60% of the
<br />portfolio comprised government securities (Treasuries, agencies, supranationals) including 42% in US
<br />Treasuries, the safest and most liquid investment type. The credit holdings in the portfolio comprise strong
<br />companies and banks with investment grade credit ratings. The City's portfolio is doing well despite the
<br />recent volatility. Falling interest rates have resulted in positive market values in the portfolio. However,
<br />Page 2 of 4
<br />City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.ore
<br />11
<br />Total TotalRetur
<br />Effective Yield
<br />Average
<br />ortfolio/Benchmark
<br />turn Quarter Since Inception
<br />ded 12/31/1 (12/31/16)
<br />Duration at
<br />Market
<br />Maturity
<br />Redwood City
<br />BofA ML 1-5 year U.S.
<br />®®
<br />Treasury,
<br />The coronavirus has reached the U.S., and several states, including California, have issued "stay at home"
<br />orders designed to limit person-to-person contact and thus the spread of the virus. What began as a
<br />health crisis has spilled over to affect businesses, the financial markets, and economies across the globe.
<br />In March 2020, PFM issued a Special Report—Federal Reserve Acts Boldly to Support Economic Growth—
<br />and they shared that the Fed held a special meeting on March 15 to lower the fed funds target rate by
<br />another 1.00%, bringing the target range to 0% - 0.25%. This was a meaningful move, but unfortunately
<br />didn't ease the mind of market participants. Equity markets continued to plummet; the S&P 500 fell below
<br />2,200 the week of March 23, its lowest level since December 2016, before bouncing back 10% over the
<br />past few days. Earlier this same week, the Fed introduced further measures to support liquidity and the
<br />availability of credit in the financial system, including unlimited purchases of Treasuries and agency
<br />mortgage-backed securities (or MBS), and the ability to buy corporate debt for the first time ever. Recent
<br />optimism in the markets built off Fed actions and the $2+ trillion stimulus package aimed at supporting
<br />both individuals and business to limit the economic impact being witnessed in the U.S.
<br />Funds flowing from the equity markets in recent weeks have sought the safe haven of US Treasury
<br />securities, causing their yields to decline. In fact, 1- and 3 -month Treasury bills are trading in negative
<br />territory. Non-governmental sectors have seen significant spread widening.
<br />In terms of the portfolio, the City's portfolio is conservatively managed. As of March 25th, 60% of the
<br />portfolio comprised government securities (Treasuries, agencies, supranationals) including 42% in US
<br />Treasuries, the safest and most liquid investment type. The credit holdings in the portfolio comprise strong
<br />companies and banks with investment grade credit ratings. The City's portfolio is doing well despite the
<br />recent volatility. Falling interest rates have resulted in positive market values in the portfolio. However,
<br />Page 2 of 4
<br />City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.ore
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