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OBJECTIVES, RISK, & DIVERSIFICATION <br /> The objectives of the investment program are as follows in order of priority: <br /> • SAFETY OF PRINCIPAL <br /> • LIQUIDITY <br /> • SUITABILITY <br /> • YIELD <br /> All investments contain an element of risk. The different types of risk include credit risk, <br /> custodial risk, concentration risk and interest rate risk. The recommended policy is <br /> designed to establish a very low tolerance for risk with safety of principal being paramount <br /> as a guiding principal and objective. <br /> The proposed update includes California State and local agency obligations and other <br /> state's obligations as authorized and suitable investments, which are allowed by State of <br /> California Government Code. Specifically, the proposed local agency and state <br /> obligations include general obligation bonds or essential service revenue bonds such as <br /> water revenue bonds that are rated "A" or better. A rating of "A" or better denotes high <br /> credit quality reflecting a low default risk. Municipal obligations offer the City a relatively <br /> low risk investment option that can result in higher yields while diversifying the City's <br /> investment portfolio. <br /> The remaining revisions include the deletion of Passbook Savings Accounts; these <br /> accounts offer relatively lower interest rates compared to other high liquidity assets such <br /> as LAIF. In addition, staff is proposing to reduce Banker's acceptances allowable <br /> investment percentage from 40% to 30% of the portfolio, consistent with the proposed <br /> investment policy's diversification section. <br /> Staff recommends that City Council approve the proposed Investment Policy and <br /> Guidelines of the City of Pleasanton. <br /> Submitted by: Approved by: <br /> XI 6k-- . <br /> Tina Olson Nelson Fialho <br /> Director of Finance City Manager <br /> Attachments: <br /> 1. Resolution <br /> Page 4 of 4 <br />