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ATTACHMENT 2 <br />2 <br />PRUDENCE <br />Pursuant to California Government Code, Section 53600.3, all persons authorized to <br />make investment decisions on behalf of the City are trustees and therefore fiduciaries <br />subject to the Prudent Investor Standard: <br />“…all governing bodies of local agencies or persons authorized to make <br />investment decisions on behalf of those local agencies investing public funds <br />pursuant to this chapter are trustees and therefore fiduciaries subject to the <br />prudent investor standard. When investing, reinvesting, purchasing, acquiring, <br />exchanging, selling, or managing public funds, a trustee shall act with care, skill, <br />prudence, and diligence under the circumstances then prevailing, including, but <br />not limited to, the general economic conditions and the anticipated needs of the <br />Agency, that a prudent person acting in a like capacity and familiarity with those <br />matters would use in the conduct of funds of a like character and with like aims, to <br />safeguard the principal and maintain the liquidity needs of the Agency. Within the <br />limitations of this section and considering individual investments as part of an <br />overall strategy, investments may be acquired as authorized by law.” <br />Investment officers acting in accordance with written procedures and the investment <br />policy and exercising due diligence shall be relieved of personal responsibility for an <br />individual security's credit risk or market price changes, provided deviations from <br />expectations are reported in a timely fashion and appropriate action is taken to control <br />adverse developments. <br />OBJECTIVES <br />The primary objectives, in priority order, of the City's investment program shall be: <br />a. Safety: Safety of principal is the foremost objective of the investment program. <br />Investments of the City shall be undertaken in a manner that seeks to ensure the <br />preservation of capital in the overall portfolio. To attain this objective, the City will <br />diversify its investments by investing funds among a variety of securities with <br />independent returns. <br />b. Liquidity: The City's investment portfolio will remain sufficiently liquid to enable the <br />City to meet all operating requirements which might be reasonably anticipated. <br />c. Return on Investment: The City's investment portfolio shall be designed with the <br />objective of attaining a market rate of return throughout budgetary and economic <br />cycles, taking into account the City's investment risk constraints and the cash flow <br />characteristics of the portfolio. <br />DELEGATION OF AUTHORITY <br />Page 35 of 248