CC PACKET 03132001 - Laserfiche WebLink

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City of Saint Anthony Investment Portfolio Review Report Executive Summary ' Attached for your review is a complete listing of all city investments as of November 30, 2000. These investments are all in legal investments under Minnesota statute 118A. These types of investments are commonly found among the portfolios of local governments. Investment objectives to date have been to ' maximize the return of city funds by investing longer term on the yield curve. This approach has worked well for the city given past cash flow needs. We would recommend that a comprehensive financial study and cash flow forecast be prepared to create an updated target for the investment decisions. The cash ' flow forecast should include reviews of city needs for capital projects, debt obligations and operating needs by staff and elected officials. ' This report will analyze six areas of the City of St Anthony's investments portfolio. They are: • Rate of return • Inherent portfolio risk • Portfolio by risk category • Competition among brokers ' • Cash flow needs • Investment vehicles ' The major findings are: • The City's average rate of return in 1.08% higher than the average rate of return on Treasuries, or ' the commonly used target rate of return for local governments. • The unrealized loss of market value on the portfolio was only 1.56% of the net book value. This represents a very small proportion of unrealized loss to net book value. ' Other major recommendations are: • Consider creating greater cash flow flexibility by investing new cash inflows in shorter-term investment vehicles. •Consider encouraging competition among brokers by bidding short term investments. •Review consolidating money market funds into one account. ' • Depending on revised cash flow needs, consider selling the zero coupon bonds and the asset backed bonds. •Create a cash flow forecast that includes all operating and long-term capital needs. •Develop long-term equipment and capital needs assessment. ' Discussion I. Is the investment portfolio yielding an adequate rate of return? •Average yield. The average yield to maturity and average yield to call were calculated using the yields at the original purchase date from the confirmation. Using the information that was obtainable, the City's average yield to maturity is ' approximately 6.65% and the average yield to call is approximately 6.74%.The average yields were then compared to treasury yields. See also the Investment Summary worksheet attached. ' Prepared by Ehlers and Associates 1 February 5, 2001