Staff Report
PREPARED BY: STEPHEN CONWAY
Finance Director
Reviewed by: Town Manager, Assistant Town Manager, and Town Attorney
110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 08/21/2018
ITEM NO: 4
DATE: AUGUST 7, 2018
TO: MAYOR AND TOWN COUNCIL
FROM: LAUREL PREVETTI, TOWN MANAGER
SUBJECT: RECEIVE THE FOURTH QUARTER INVESTMENT REPORT (APRIL THROUGH
JUNE 2018) FOR FISCAL YEAR 2017/18.
RECOMMENDATION:
Receive the Fourth Quarter Investment Report (April through June 2018) for Fiscal Year
2017/18.
DISCUSSION:
As of June 30, 2018, the Town had a weighted portfolio yield of 1.73% which for the first time in
many quarters lagged that of the Local Agency Investment Fund (LAIF) yield of 1.85%
(difference of 12 basis points). However, it should be noted that as of June 30, 2018 LAIF had a
portfolio average days to maturity of 193 versus 389 for the Town. For the quarter, the Town’s
weighted average rate of return increased 13 basis points (0.13%) from 1.60% to 1.73%. Cash
balances remained steady this quarter due to the receipt of an apportionment of property
taxes that continued into the remainder of the fourth quarter of the calendar year.
During the fourth quarter, yields continued to generally increase in anticipation of stronger
economic growth. The US economy grew at its fastest pace in four years this spring. The
Federal Reserve on August 1, 2018 concluded its policy meeting deciding to keep rates steady
but upgraded its view of the US economy from “solid” to “strong ,” increasing the likelihood of
a rate increase at its September 2018 meeting.
Because of the rising interest rate forecast, the Town’s investment strategy continues to focus
on the purchase of new short-term (two years or less in maturity) investments as the rewards
for longer term investments in the three to five year maturity do not have adequate spreads to
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SUBJECT: FOURTH QUARTER INVESTMENT REPORT (APRIL THROUGH JUNE 2018) FOR
FISCAL YEAR 2017/18
AUGUST 7, 2018
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DISCUSSION (Cont’d):
justify the risk of holding longer term maturities. As a result, staff continues to replace matured
or called investments with similar investments with respect to maturity and credit quality.
CONCLUSION:
Staff recommends that the Town Council receive the Fourth Quarter Investment Report (April
through June 2018) for Fiscal Year 2017/18.
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
Attachment:
1. Fourth Quarter Investment Report for FY 2017/18 (April through June 2018)