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HomeMy WebLinkAboutInvestment Report - September 2012 - Joint ConsiderationCITY PORTFOLIO CONCENTRATION LIMITS September 2012 % Of Investments Book Value Portfolio CALIFORNIA ASSET MANAGEMENT PROGRAM $ 2,345,873.64 1.18% CITY LOAN TO RDA 13,554,999.95 6.81 % WF/L.A.I.F. BOND PROCEEDS 25,387,899.47 12.76% FEDERAL AGENCY -- COUPON - 0.00% LOCAL AGENCY INVESTMENT FUND 47,247,442.81 23.74% WELLS FARGO CORPORATE TRUST 5,264,315.07 2.65% CORPORATE MEDIUM -TERM NOTES 8,716,243.29 4.38% RIVERSIDE COUNTY TREASURER 93,046,520.96 46.76% TOTAL BEFORE CASH $ 195,563,295.19 98.28% PLUS: CASH $ 3,426,565.62 1.72% GRAND TOTAL $ 198,989,860.81 (1) 100.00% FOOTNOTE: (1) In the City of Palm Desert Comprehensive Annual Financial Report ("CAFR"), both the City of Palm Desert ("City") and the City's external auditor define total investments as demand deposits, investments in various instruments, and investments held in local government investment pools. 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E m V H >. 41 U U C O) c a`°i O 0: W m a vi -10Qw�� N 7 fs/ A g C C� E N O m N O >N 2 � = Q cCc O Z N y y0 O C' d =a O a a dd �C Q m NI N M O O O I O 0 co NM O O W7, 1 M N IV M M N N n A N N M ai _M N M M N N M V V YN7 n n t, N N V M M N N v a f4 A v v N N N N a a 0 0 V) N M Z V LL O N o w z a w wz cn w > O z z z C w rn C O 0 W > Q > Q fn Q ° O '° a a N fq ro M 0 0 0 0 N � .- N co b a Q O N O _a N 0 N O = Q 01 a y.o-. 0 LLi cc M tT' O O o o d a 0 0 f Q. .2 yv N o� y yQ� O R' to 7 O O pMj r- O N Y N V M O m t0 V N � M" o o N N 0) N a M d O n � n O a Ut � M N O OU 0 W N O o o M M _ y ID .N vi 0 N v n 'e� M A m rl O C m _Z =a a� u0 NN as a o 0 m d N N N c V Q N n � M Z X U co W Z) � 2 cr U F- 2 d m :D D a m Q a m y Z Z m m F/5 N 41 0C D q _ 0 0 c Q � L y A � U c � a o y N co j O O C N N N N O O N O 0 IA � Y � a U U) U m U U N c 3 Ix ti y bCity of Palm Desert xeakevrv, d Anueawww, ��bcxt ECONOMIC COMMENTARY Wells Fargo Securities believes that the Federal Reserve's new quantitative easing program ("QE3") could last up to two years. The Fed plans to buy $40 billion of mortgage -backed securities ("MBS") each month in order to lower mortgage interest rates. The Fed's decision to target the MBS market suggests that it views a sustained housing recovery as a precondition for overall economic stability and growth. QE3 may also serve as a hedge against the economic damage that could result from Congressional gridlock over the forthcoming "fiscal cliff'. The basic intent of QE3 is to lift financial asset prices, and to create a positive wealth effect that will lift the U.S. economy. Consumers are more likely to spend money if they think that their houses and stock portfolios are worth more. Likewise, corporations are more likely to hire people, and make additional investments if they think that their stock is worth more. QE3 will expand the money supply, further cheapening the value of the U.S. dollar, and putting upward pressure on commodities import prices. While an expanding money supply can create the potential for higher inflation, inflation also requires an increase in the velocity of money (which is closely tied to bank lending). Bank lending is currently constrained by a combination of higher capital requirements and tighter government regulation. City Treasurer Certified California Municipal Treasurer PORTFOLIO STATISTICS Thousands of Dollars 2012 I MarKets Team City Treasurer Paul S. Gibson, C.C.M.T. Deputy City Treasurer Thomas W. Jeffrey, J.D., M.B.A. Investment Objectives The treasurer shall invest all public monies in a manner that ensures safety of principal; sufficient liquidity to finance the City's expenditures; and the highest yield possible after the previous two objectives have been met. Month -End Book Value $ 198,990 $ 206,754 $ 205,805 $ 216,803 $ 218,086 $ 210,198 Month -End Market Value $ 199,032 $ 206,794 $ 205,845 $ 216,813 $ 218,101 $ 210,229 Paper Gain (Loss) $ 42 $ 40 $ 40 $ 10 $ 15 $ 31 Prior Year Book Variance $ (6,063) $ 99 $ (1,578) $ (6,478) $ (1,596) $ 3,543 Interest Earnings $ 64 $ 71 $ 72 $ 75 $ 76 $ 72 Yield -To -Maturity 0.39% 0.40% 0.42% 0.43% 0.43% 0.42% Weighted Maturity (Days) 29 28 40 40 38 39 Effective Duration 0.04 0.04 0.05 0.05 0.05 0.06 All data as of September 30, 2012 Dollars in Thousands Maturities < I < 2M < 3M < 6M < 1Y < 2Y < 3Y < 4Y < 5Y Total: Market Value $ 173,292 8,758 PORTFOLIO CHARACTERISTICS September 2012 Ratings Market Value AAA or Aaa $ 100,657 AA or Aa 4,701 A 4,057 Unrated 86,190 Total: $ 195,605 Assets Market Value County Pool 93,047 LAW 47,247 WF/LAIF Bond Proceeds 25,388 City Loan to RDA 13,555 MTN 8,758 CAMP 2,346 W F/Bond Proceeds 5,264 Agencies - Total: $ 195,605 Month City Yield LAW Yield Variance Oct11 0.43 0.39 0.05 Nov 0.44 0.40 0.04 Dec 0.37 0.38 -0.01 Jan12 0.40 0.39 0.01 Feb 0.41 0.39 0.02 Mar 0.45 0.38 0.07 Apr 0.42 0.37 0.05 May 0.43 0.36 0.07 Jun 0.43 0.36 0.08 Jul 0.42 0.36 0.05 Aug 0.40 0.38 0.02 Sep 0.39 0.35 0.04 Maturities Distribution 100 95 80 0 c 60 2 >= 40 0 a 20 0 0 0 5 0 0 0 0 0 <1M <2M <3M <W <1Y <2Y <W <4Y <5Y Credit Quality Unrated 44% Asset Allocation County Pool 48% Agencies 0% WF/LAIF Bond Proceeds 13% W F/Bond Proceeds CAMP MTN City Loan to 3% 1% 4% RDA 7% J 4AA or Aaa 52% AA or Aa % 2% 1/b LAI F 24% Performance 0.5 °'I��III�III���III���I 0.0 Octl1 Nov DecJan12 Feb Mar Apr May Jun Jul Aug Sep LAIF Yid UCiy Y�dd CITY OF PALM DESERT TREASURER'S OFFICE PAGE 2 OF 3 STATEMENT OF COMPLIANCE September 2012 The investment of the City of Palm Desert securities portfolio is governed by California Government Code Section 53601 and by the Palm Desert Statement of Investment Policy. The City investment policy is more conservative than State law. The Palm Desert Audit, Finance, and Investment Committee, and the Palm Desert City Council review the City investment policy annually. For the month ended September 30, 2012, the City investment portfolio was in compliance with all applicable state and local laws and regulations. The City Treasurer's Office continued to pursue conservative and prudent investment strategies, based upon the stated objectives of safety, liquidity, and yield. Barring unforeseen events, the City Treasury should have sufficient cash to finance City expenditures for the next six months. In addition, portions of the City investment portfolio could be liquidated in order to meet any significant, unexpected cash requirements. Interactive Data Services provided the market value prices for securities in the City investment portfolio. All balances are bank balances. Respectfully submitted, Yaafs qi i Fjea, ee.m..j: City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS California Government Code City Investment Policy CA Govt Maximum Maximum Minimum Maximum Maximum Minimum % of City Code Investment Category Maturity Limit Quality Maturity Limit Quality Portfolio 53601(a) Palm Desert Bonds 5 Years No Limit I I I - 53633 Demand Deposits No Limit No Limit No Lim—ita No Limit - 53601(b) U.S. Treasuries 5 Years No Limit 5 Years No Limit - 53601(c) CA State Debt 5 Years No Limit Not Authorized 53601(d) CA Local Agency Debt 5 Years No Limit Not Authorized 53601(e) Federal Agencies 5 Years No Limit 5 Years No Limit - 53601(f) Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 or P-1 - 53601(g) Commercial Paper 270 Days 25% A-1/P-1 270 Days 25% A-1 or P-1 - 53601(h) Negotiable CDs 5 Years 30% 5 Years 30% AA- or Aa3 - 53601(i) Repos 1 Year No Limit 30 Days 20% - 53601(1) Reverse Repos 92 Days 20% Not Authorized 53601(j) Medium -Term Notes 5 Years 30% A 5 Years 30% A 4.4% 53601(k) Money Market Funds 90 Days 20% AAA & Aaa 90 Days 20% AAA & Aaa 2.7% 53601(I) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government Investment Pools 90 Days No Limit AAA & Aaa or Advisor 90 Days 50% (1) 1 AAA & Aaa or Advisor 47.9% 53601(n) Mortgage -Backed Securities 5 Years 20% A (Issuer) & AA (Security) Not Authorized 16429.1(b) L.A.I.F. No Limit I $50MM/Acct No Limit $50MM/Acct 36.5% Footnotes: (2)1 91.5% (1) Maximum concentration limit for local agency investment pools, excluding bond proceeds. (2) Total does not include the City Loan to RDA, and cash. CITY OF PALM DESERT TREASURER'S OFFICE PAGE 3 OF 3