Fort Walton Beach Council agenda — 02-26-13--regular — reading text

0%- 10% 8% Real Estate Investment Trusts 0 % - 10 % o 5% Inflation Hedge 0%- 10% 3% Fixed Income 35% - 100% 40% Cash Equivalent 2%- 5% 2% Domestic Equity —No more than 5% of the total equity portfolio valued at market may be invested in the equity of any one corporation, ownership of the shares of one company shall not exceed 2% of those outstanding and not more than 25% of equity valued at market may be held in any one sector, as defined by the Industry Classification Benchmark universe database. Other than these constraints, there are no quantitative guidelines as to issues, industry or individual security diversification. However, prudent diversification standards should be developed and maintained by the Portfolio Manager. International Eauit — No more than 5% of the total equity portfolio valued at market may be invested in the common equity of any one corporation, ownership of the shares of one company shall not exceed 2% of those outstanding, and not more than 2567( of equity valued at market may be held in any one sector, as defined by the Industry Classification Benchmark universe database. The overall non -U. S. equity allocation should include a diverse global mix that is comprised of the equity of companies from multiple regions and sectors. Real Estate hit esonent Trust — Real estate assets will be held only in diversified investments, primarily Real Estate Investment Trusts and servicing companies. Inflation Hedge — Inflation hedging assets will include only investments holding among other assets: Treasury Inflation Protected Securities ( " TIPS "), commodities or commodity derivative contracts, index- linked derivative contracts, or the equity of companies in generally accepted businesses believed to hedge inflation. Fixed Income — Diversified fixed income will be the fundamental basis for the Fund. Fixed income investments . v shall be high quality with a preponderance of the investments in ( q U. S. Treasury, federal agencies and U.S. ;? Government guaranteed obligations, ( 2) corporate issues including convertibles, and ( 3) sovereign and corporate debt of foreign countries. Fixed income securities of any one issuer shall not exceed 5% of a total bond portfolio at time of purchase. The 5% limitation does not apply to issues of the U. S. Treasury or other Federal Agencies. The overall rating of the fixed income assets shall be at least investment grade based on the rating of two of the three Nationally Recognized Statistical Rating Organizations ( NRSRO) ( Moody' s Investor Service, Standard & Ordinance 1876. Adopted march 12. 2013 L PacketPw z&  11. 1. a City of Fort Walton Beach, FL BEAL MEMORIAL CEMETERY INVESTMENT POLICY Poor' s, and Fitch Ratings). In cases where the yield spread adequately compensates for additional risk, high yield or emerging market debt securities can be purchased. Cash Equivalent — Cash equivalents shall be held in funds complying with Rule 2( a) -7 of the Investment Company Act of 1940. Prohibited Investments Investments not listed in this Policy are prohibited. Except for purchase within authorized Investment Assets, securities having the following characteristics are not authorized and shall not be purchased: letter stock and other unregistered securities, commodities or commodity contracts where the Fund is a eounterparty, short sales, margin transactions, private placements ( with the exception of Rule 144A securities), venture capital funds, private equity, or hedge funds. Further, derivatives, options, futures, or any other investment for the sole purpose of direct portfolio leveraging are prohibited. Direct ownership of real estate, natural resource properties such as oil, gas or timber and the purchase of collectibles is also prohibited. Illiquid investments for which a generally recognized market is not available or for which there is no consistent or generally accepted pricing mechanism are prohibited. Portfolio investments designed to hedge various risks including volatility risk, interest rate risk, etc. are allowed to the extent that the investments do not create direct portfolio leverage. One example of a hedge vehicle is an exchange traded fund ( "ETF') which takes short positions. rN V. BID REQUIREMENT After the Finance Director and Investment Advisor(s) have determined the approximate maturity date based on cash flow needs and market conditions and have analyzed and selected one or more optimal types of investments, the security in question must be competitively bid when feasible and appropriate. Except as otherwise required by law, the most economically advantageous bid must be selected. H N However, if obtaining bids /offers is not feasible and appropriate, securities may be purchased utilizing the ' o. comparison to current market price method on an exception basis. Acceptable current market price providers n° include, but are not limited to: VUT u A. Telerate Information System 0a B. Bloomberg Information Systems E C. Wall Street Journal or a comparable nationally recognized financial publication providing daily market y pricing c T D. Daily market pricing provided by the City' s custodian or the correspondent institution ^' EE The Finance Director or the Investment Advisor( s) shall utilize the competitive bid process to select the securities to be purchased or sold. Selection by comparison to a current market price, as indicated above, shall only be + utilized when, in judgment of the Finance Director or the Investment Advisor( s), competitive bidding would H inhibit the selection process. r c Examples of when this method may be used include: raE A. Time constraints due to unusual circumstances preclude the competitive bidding process Q B. No active market exists for the issue being traded due to the age or depth of the issue C. A security is unique to a single dealer, for example, a private placement Ordl on , 1896, Adopud March 12, 2013 P9.  11. 1. a City of Fort Walton Beach, FL BEAL MEMORIAL CEMETERY INVESTMENT POLICY D. The transaction involves new issues or issues in the " when issued" market Overnight sweep investments or repurchase agreements will not be bid, but may be placed with the City' s depository bank relating to the demand account for which the sweep investments or repurchase agreement was purchased. VI. RISK AND DIVERSIFICATION The Fund recognizes the strategic importance of asset allocation and style diversification in investment performance over long periods of time. Asset allocation and diversification is the fundamental strategy adopted by the Fund to ensure risk versus reward in regards to standard deviation. Investments should be diversified to the extent practicable to control the risk of loss resulting from overeoncentration of assets in a specific maturity, issuer, instrument, asset class, geography, investment style, dealer, or bank through which financial instruments are bought and sold. Investment risk can result from issuer defaults, market price changes, and changes in credit ratings, reinvestment of principal or interest, duration, or various technical complications leading to illiquidity. The Fund will be managed in a style that seeks to minimize principal fluctuations over the established investment horizon and that is consistent with the Fund's investment objectives. VII. REBALANCING n The asset allocation range established by this Policy represents a long -term perspective and uses a strategic approach ( periodically rebalancing the portfolio in order to maintain the long -term asset allocation goal) to maintain consistency over time. However, a tactical approach ( rebalancing the percentage of assets held in + various categories to take advantage of market pricing anomalies or strong market sectors) may also be implemented to protect the principal of the portfolio or achieve short- term profits as determined by the Investment N Advisors). As such, any rapid, unanticipated market shifts or changes in economic conditions may cause the N asset mix to fall outside Policy Asset Weighting ranges. The Fund views that any 5% point drift away from the v. Asset Weighting targets warrants a rebalance. When these divergences occur, the Investment Advisor( s) will review, rebalance, or cause the Portfolio Managers) to rebalance the assets to within the specified ranges. ? Similarly, if the Liquidity Assets fall to a level where Fund distributions cannot be met, the Investment Advisor(s) will raise Liquidity Assets by reducing Investment Assets in a manner resulting in a range consistent with the ranges stated in this Policy. When the Investment Advisor(s) is notified of new contributions, the Liquidity Assets will be filled first, followed by Investment Assets. VIII. MASTER REPURCHASE AGREEMENT All approved investment institutions and brokers /dealers transacting repurchase agreements are required to execute and perform as stated in the Fund' s Master Repurchase Agreement.