10 September 8, 2026
Honorable Mayor and City Council
City of Long Beach
California
RECOMMENDATION:
Recommendation to receive and file the Investment Report for Quarter ending June 30, 2026. (Citywide)
DISCUSSION
The City of Long Beach (City) Treasurer's Office in the Financial Management Department invests City funds in compliance with the California Government Code, Section 53600 et. seq., and the City's Investment Policy. As of June 30, 2026, these funds had a book value of approximately $2.39 billion.
Statutory Compliance
All investment transactions have been executed in conformance with the City’s Investment Policy and the California Government Code. The Investment Advisory Committee, composed of the Assistant City Auditor, Principal Deputy City Attorney, City Treasurer, three Assistant City Treasurers, City Controller, and designated representatives from the Harbor and Utilities Departments, meets quarterly, or as needed, to review investment policies, strategies, and performance. All portfolio transactions as of June 30, 2026, can be found in the Investment Trading Activity (Attachment A).
Investment Strategies
The Treasury’s investment strategy for the investment pool is to maintain and preserve the safety of funds, provide adequate liquidity for anticipated operating disbursements, and to maximize the return on investments through the prudent implementation of the investment policy. The cash flow needs of the City are monitored daily to ensure appropriate liquidity is maintained, with maturities through five years. The Treasury’s general investment strategy is to buy high quality fixed income investments and hold to maturity; however, Treasury maintains the discretion to divest prior to maturity should market conditions yield a financial benefit for the City. The City’s benchmark is the ICE Bank of America Merrill Lynch (BAML) Zero-to-Five Year US Treasury Index.
Financial Management
411 W. Ocean Boulevard, 6th Floor, Long Beach, CA 90802 (562) 570-6425
Honorable Mayor and City Council
September 8, 2026
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Investment Position and Performance
The following table summarizes the City's investment pool position and performance for the quarter ending June 30, 2026:
1) Book value is the initial value/outlay for an investment at the time of purchase (as much as five years ago) and still held in the portfolios, while market value represents the value at a point in time based on current market conditions. 2) Unrealized Gain/(Loss) is the difference between book and market value. It is inversely related to the change in interest rates. As interest rates rise or fall, the value of fixed-income assets moves in the opposite direction. Typically, investments are held to maturity, and therefore, gains/losses are rarely realized.
3) The portfolio yield is a return measure for an investment over a set period of time, expressed as a percentage. The portfolio yield is shown before asset management fees.
4) Interest Earnings is the amount of interest earned from investments over a 3-month period, before asset management fees.
The quarter ending June 30, 2026, experienced an increase in market interest rates, which caused the book-value-to-investment value adjustment to become negative. This resulted in an unrealized loss of $7,314,211 compared to prior quarter's unrealized gain of approximately $4,794,800. Generally, there will be minimal actual realized loss/gain since most securities are held to maturity.
Throughout the quarter, the City maintained its focus on yield optimization within the current interest rate environment. This tactical strategy involves divesting from legacy securities purchased four to five years ago with coupons below 3% and remaining maturities under one year. Proceeds are immediately invested into certificates of deposit (CD) or commercial paper (CP) with the same maturity date and significantly higher yields. By matching the maturity dates of the new purchases with the original securities, the City ensures continued cash flow stability.
While these sales result in an upfront realized loss, the higher yields of the new investments more than offset the loss and generates a net realized gain. Furthermore, the total return on the original investments remains positive when accounting for the interest earned over the full holding period. During the quarter, the City sold two U.S. Treasuries and one Corporate Bond with a realized loss of $181,894. The City then purchased three CDs and one CP, which are projected to earn $500,763, resulting in a net realized gain to the City of $318,869. This strategy was presented and supported by the Investment Advisory Committee during the quarterly meeting on July 28, 2026. Going forward, the City will continue to leverage its analytical model to identify and execute similar yield enhancement opportunities.
For the three months ending June 30, 2026, the quarterly portfolio yield was 4.15 percent, which was 10 basis points (0.10 percent) above the benchmark. Another view of investment
Honorable Mayor and City Council
September 8, 2026
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performance considers actual interest earnings, irrespective of changes in market value of the portfolio that are unlikely to be realized. As shown in the bottom-right portion of the table above, interest earnings totaled approximately $22.8 million for the quarter ending June 30, 2026, which was $137,205 higher than the previous quarter.
Investment portfolio holdings as of June 30, 2026, are included in Attachment B.
This matter was reviewed by Deputy City Attorney Ashleigh Stone on August 17, 2026 and Revenue Management Officer Valerie Valentine on August 18, 2026.
TIMING CONSIDERATIONS
City Council action on this item is not time critical.
FISCAL IMPACT
There is no fiscal or local job impact associated with this recommendation. This recommendation has no staffing impact beyond the normal budgeted scope of duties and is consistent with existing City Council priorities.
SUGGESTED ACTION:
Approve recommendation.
Respectfully submitted,
Kevin Riper
Director
Financial Management
ATTACHMENTS: A: CITY OF LONG BEACH INVESTMENT TRADING ACTIVITY B: CITY OF LONG BEACH INVESTMENT PORTFOLIO HOLDINGS