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Page 2 of 4 <br />City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.org <br />ANALYSIS <br />The attached investment report indicates that as of December 31st, funds (excluding cash with fiscal <br />agents) from all sources were producing an average annual earnings rate of 3.80%, slightly down from <br />3.82% as of September 30, 2024. The market value of the portfolio as of December 31st was $405,016,289, <br />up from $377,426,318 as of September 30, 2024. The investment balance of $405.0 million includes the <br />funds managed by PFMAM, funds held in the San Mateo County Treasurer’s investment pool, and funds <br />with the State Treasurer’s investment pool. All these investments comply with the City’s investment <br />policy. The City has sufficient liquid resources available to meet expenditure requirements for the next six <br />months. <br />The portion of the City’s portfolio that is managed by PFMAM has a total market value of $270,448,229 <br />as of December 31st, down from $272,079,844 as of September 30, 2024. As of December 31st, the <br />portfolio was earning an annual yield at cost of 3.65%, up from 3.55% as of September 30, 2024, and the <br />yield at market was 4.45% as of December 31st, up from 3.82% as of September 30, 2024. Yield at market <br />is the yield that the portfolio would be earning if the entire portfolio were purchased on December 31st, <br />using current investment costs and yields. <br />The market benchmark, selected in consultation with the City Council Finance/Audit Sub-Committee, is <br />the ICE BofA 1-5 year U.S. Treasury Index. Below is a table summarizing the City’s portfolio performance <br />compared to the benchmark, for the period ending December 31, 2024. <br />Portfolio/Benchmark <br />Total Return <br />Quarter Ended <br />12/31/24 <br />Total Return Since <br />Inception (12/31/16) <br />Effective <br />Duration <br />(years) <br />Redwood City -0.57%1.74%2.53 <br />ICE BofA 1-5 year U.S. <br /> Treasury Index <br />-0.77%1.45%2.53 <br />The fourth quarter 2024 investment market themes identified by PFMAM were: <br />U.S. economic soft landing remains on track <br />• Inflation and labor markets are in line with Fed expectations despite slower recent progress <br />• Strong economic growth prospects remain intact, aided by a resilient consumer <br />• Changes to fiscal policy may impact growth and inflation trajectory <br />Fed easing cycle moves forward as expected, but looks to slow in 2025 <br />• The Fed cut the federal funds target rate by an additional 50 basis points (bps) during the fourth <br />quarter to 4.25% - 4.50% <br />• The Fed’s December “dot plot” implies another 50 bps of cuts in 2025, less than the 100 bps of <br />cuts previously projected in September <br />• Fed Chair Jerome Powell noted the slower pace of cuts reflect “stickier” inflation heading into <br />2025 <br />6.A. - Page 2 of 60 <br />7