Laserfiche WebLink
<br /> <br />2016-002 Investments <br /> <br />Criteria: Minnesota Statute 118A.04 provides authority for governmental entities to <br />invest public funds, subject to certain conditions which limit an entity’s credit risk. <br /> <br />Condition: The City has investments in two fixed income mutual funds which totaled <br />$1,546,355 at December 31, 2016. A portion of each fund’s holdings does not appear to <br />meet the conditions set forth in Statute 118A.04 based on the credit ratings of the fund’s <br />investments. According to each fund’s website, approximately 30% of fund A’s holdings <br />and 32% of fund B’s holdings were rated below “A” as of April 30, 2017. <br /> <br />Cause: Based on City records, both mutual funds have been held since 1993 and may have <br />been donated to the City at that time. <br /> <br />Effect: Each fund has the potential for its investments to decrease in value, although, the <br />average rate of return over the past 10 years for both funds is positive. <br /> <br />Recommendation: We recommend the City sell any investments which do not meet the <br />criteria established by Minnesota Statute 118A.04. <br /> <br />Views of Responsible Officials and Planned Corrective Action: In working with the City’s <br />investment broker, staff determined the best course of action was to sell these investments in <br />order to comply with Minnesota Statute 118A.04 and the City’s investment policy. Both <br />mutual funds were sold on May 24, 2017. Going forward, any donated investments will <br />immediately be liquidated if they do not comply with statutes or the City’s investment <br />policy. <br />