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DISCUSSION <br />The City's current investment portfolio consists of U.S. Treasury Securities, Federal <br />Agency Securities, and the State Local Agency Investment Fund (LAIF). The strategy of <br />the investment program is to earn a market rate of return, while maintaining sufficient <br />liquidity to meet operating requirements. Staff has utilized a conservative approach, <br />which is described as "buy and hold", meaning that once a security is purchased it is <br />held until maturity. <br />The City has the authority to purchase investments that could produce higher <br />investment returns (e.g. commercial paper, corporate bonds); however these type of <br />investments often have added risk. Staff has historically invested in U.S. Treasury and <br />Federal Agency Securities. U.S. Treasury Securities are considered the safest <br />investment the City can make since they are backed by the full faith and credit of the <br />federal government. Federal Agency Securities have the implicit guaranty/support of the <br />federal government since they are government-sponsored enterprises. All investments <br />contain an element of risk, but the City's current investment holdings are conservative <br />and provide sufficient liquidity for operating cash requirements. <br />As of September 30, 2008, the entire portfolio, exclusive of money market accounts and <br />LAIF, was held in third party safekeeping for the benefit of the City of Pleasanton at <br />Bank of New York. Bank of New York is a contractual agent for the City of Pleasanton. <br />Submitted by: <br />~a.i~~~--_ _ <br />David P. Culver <br />Director of Finance <br />Approved <br />Nelson Fialho <br />City Manager <br />Page 2 of 2 <br />