Fort Walton Beach Council agenda — 01-08-13--regular — reading text

of market value. To attain this objective, diversification is required in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. 2. Liquidity of Funds The portfolios shall be managed in such a manner that funds are available to meet reasonably anticipated cash flow requirements in an orderly manner. Periodic cash flow analyses will be completed in order to ensure that the portfolios are positioned to provide sufficient liquidity for budgeted operating and capital needs. Details regarding the City' s budget and spending plan will be updated annually. Investment Income The portfolios shall be designed with the objective of attaining a market rate of remm throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. Return on investment is of least importance compared to the safety of principal and liquidity objectives described above. However, remm is attempted through active management where the Portfolio Manager utilizes a total remm strategy ( which includes both realized and unrealized gains and losses in the portfolio). This total return strategy seeks to increase the value of the portfolio through reinvestment of income and capital gains. The core of investments is limited to relatively low risk securities in anticipation of coming a fair remm relative to the risk being assumed. Despite this, a Portfolio Manager may trade to recognize a loss from time to time to achieve a perceived relative value based on its potential to enhance the total remm of the portfolio. Investments should be made subject to the cash flow needs and such cash [ lows are subject to revisions as market conditions and the City' s needs change. However, when the invested funds are needed in whole or in part for the purpose originally intended or for more optimal investments, the Finance Director or Investment Advisor(s) may sell the investment at the then- prevailing market price and place the proceeds into the proper account at the City' s custodian. IV. AUTHORIZED INVESTMENTS, MATURITY & LIQUIDITY REQUIREMENTS, AND m PORTFOLIO COMPOSITION c It is the City' s desire for all accounts to be fully invested; however, any funds in the custodial account not m otherwise invested will be " swept" each night into a fully collateralized repurchase agreement or institutional Tim money market fund. r The following matrix identifies the portfolio investment requirements and allocation limits on security types, issuers, and maturities as established by the City. The Maximum Allocation Limit and Maximum Issuer Limit apply to the City' s comprehensive portfolio ( i.e. all ofthe City' s investments covered under this policy); they do not apply separately to each of the portfolio types. The average duration of the funds managed by any one E external portfolio manager on beha f / of the City as part of the por(folims) shall not exceed 1. 2 times the m selected benchmark. " Q The Finance Director or Investment Advisor( s) shall have the option to further restrict investment percentages from time to time based on market conditions, risk, and diversification investment strategies. The percentage allocations requirements for investment types and issuers are calculated based on the market value of each investment. The allocation limits and security types do not apply to the investment of debt proceeds, which are governed by the debt covenant included in the debt instmment. Investments not listed in this Policy are prohibited. o. dlnan« I875, Adopted rnnaary 8_ 1013 Packet Pg;,57  12. 1 . ti City of Fort Walton Beach, FL INVESTMENT POLICY Maximum Maximum Security Type Minimum Rating Allocation Issuer Requirement Limit Limit N/ A 75% 25% Non -Negotiable Interest Bearing Time Certificates of Deposit AAAm 25% N/ A Local Government Surplus Funds Trust Fund Intergovernmental Investment Pool AAA 25% N/ A AAAm 50 °1. 25% SEC Registered Money Market Mutual Funds United States Government Securities N/ A 1009/6 N/ A Repurchase Agreements N/ A 50% 25% Bankers' Acceptances P - I / A -1 35 %, 20% Commercial Paper P - l/ A -1 25% 15% United States Government Agencies 25% N/ A 50% full faith and credit of the United States Government) Federal Instrumentalities United States Government Sponsored Enterprises " GSE ") N/ A 75% 40% non -full faith and credit of the United States Government) Secuntized Issues* full faith and credit of the United States Government) N/ A 10% Mortgage- Backed ( MBS) Securilized Issues* non -full faith and credit of the United States Government) AAA 10% Commercial Mortgage- Backed ( CMBS), Asset -Backed ( ABS) Single ° A" by any 3/° Corporate Notes* two NRSRO Single " A" by any 3 State or Local Government Taxable or Tax- Exempt Debt* two NRSRO TheThe combinedcombined allocation allocation limitlimit fundsfunds invested invested inin SecuritizedSecuritized Issues,Issues, CorporateCorporate Notes,Notes, andand StateState oror LocalLocal Government Government TaxableTaxable oror Tax-Tax- E.E.remptrempt DebtDebt cannotcannot exceedexceed 75% 75% ToTo thethe extentextent possible,possible, anan attemptattempt willwill bebe mademade toto matchmatch investmentinvestment maturitiesmaturities withwith knownknown cashcash needsneeds andand anticipatedanticipated cashcash flowflow requirements.requirements. Investments Investments ofof currentcurrent operatingoperating fundsfunds ( ( liquidityliquidity andand enhancedenhanced cashcash portfolios)portfolios) shallshall havehave maturitiesmaturities ofof nono longerlonger thanthan twenty-twenty- fourfour ( ( 24)24) months.months. Investments Investments ofof bondbond reserves,reserves, construction construction funds,funds, andand otherother non-non- operatingoperating fundsfunds ( ( short-short- andand longlong - - termterm portfolios)portfolios) shallshall havehave aa termterm appropriateappropriate toto thethe needneed forfor fundsfunds andand inin accordanceaccordance withwith debtdebt covenants,covenants, butbut inin nono eventevent shallshall exceedexceed fivefive ( ( 5)5) years.years. ForFor thethe purposepurpose ofof thisthis Policy,Policy, thethe toptop NationallyNationally RecognizedRecognized Statistical Statistical RatingRating OrganizationsOrgani ( zations ( NRSRO)NRSRO) forfor corporatecorporate andand municipalmunicipal securitiessecurities areare Moody'Moody' ss InvestorInvestor