FINANCE DEPARTMENT
DATE: OCTOBER 13, 2023
TO: Honorable Mayor and City Council
VIA: Damien O’Bid, City Manager
FROM: Angela Courter, Administrator Services Director
SUBJECT: INVESTMENT REPORT FOR THE QUARTER ENDED
SEPTEMBER 30, 2023
Attached for your information is the quarterly report of investments as of September 30, 2023.
The Managed Investment Portfolio ($9,900,697), State of CA Local Agency Investment Fund ($11,133), California Asset Management Program (CAMP) Pooled Investment Fund ($6,605,464), Cash/Time Deposits ($1,826,468), Restricted Escrow Balance ($2,375,000) and Bank Trustee/Fiduciary Funds ($285,535) continue to be invested in accordance with the Government Code and the Council Investment Policy as adopted on May 9, 2023. Accrued interest on investments totaled $98,235 this quarter. Earned interest is the interest earned on investments over a specific time period, accrued interest is the interest that an investment has earned, but hasn’t yet been received, and paid interest is the interest that has already been received as payment.
During the quarter, no investments were purchased. During the quarter, two investments matured, totaling $4,252,000. The funds were not reinvested.
Pooled investments balances: California Asset Management Program (CAMP) balance was $6,605,464 & State of CA Local Agency Investment Fund (LAIF) balance was $11,133. U.S. Bank Money Market fund balance was $36,139.
Council Information
FY 2023-24 1st Quarter Investment Report
September 30, 2023
Two-year Treasuries yielding 4.87% at the beginning of the quarter ended higher at the end of the quarter at 5.03%, which was an increase of 16 basis points for the quarter.
As of September 30, 2023, the Weighted Yield to Maturity on the Managed Investment Portfolio was 4.69%.
At the end of this quarter, the Weighted Average Maturity of the Managed Investment Portfolio was 1.85 years.
The Federal Open Market Committee (FOMC) meets approximately every six weeks and determines the level of the Federal Funds Rate. At their July 26th meeting, the FOMC voted to increase the Federal Funds Rate by 0.25%, raising it to 5.50%. At the September 20th meeting, the FOMC voted to maintain the Federal Funds Rate target range at its current level of 5.50%.
Summary from the September 20th meeting:
“Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have slowed in recent months but remain strong, and the unemployment rate has remained low. Inflation remains elevated. The U.S. banking system is sound and resilient. Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. The Committee will continue to assess additional information and its implications for monetary policy. In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective.” Finance staff hired Optimized Investment Partners in May to help improve the investment returns for the city. Ongoing portfolio management activity will continue to be performed in partnership with Optimized Investment Partners, the City Manager and the Administrator Services Director.
Council Information
FY 2023-24 1st Quarter Investment Report
September 30, 2023
Considering the projected timing of cash receipts and disbursements and the structure of the Pooled Investment Portfolio, the City will be able to comfortably meet overall cash flow needs over the next six months.
If you have any questions, please feel free to contact me at 707-665-4236.