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: 05/21/2019
ITEM NO: 2
DATE: MAY 6, 2019
TO: MAYOR AND TOWN COUNCIL
FROM: LAUREL PREVETTI, TOWN MANAGER
SUBJECT: RECEIVE THE THIRD QUARTER INVESTMENT REPORT (JANUARY THROUGH
MARCH) FOR FISCAL YEAR 2018/19.
RECOMMENDATION:
Receive the Third Quarter Investment Report (January through March 2019) for Fiscal Year
2018/19.
DISCUSSION:
As of March 31, 2019, the Town’s weighted portfolio yield of 2.00% is trending slightly below
the Local Agency Investment Fund (LAIF) yield of 2.43%. This difference is primarily due to the
LAIF portfolio’s weighted average maturity (WAM) of 192 days being significantly below the
Town’s WAM of 243 days. During periods of rising interest rates, it is not unusual in the short
run for the LAIF’s shorter WAM to outperform portfolios that have a longer average maturity.
Staff continues to replace matured or called investments with similar investments with respect
to maturity and credit quality. For the quarter, the Town’s weighted average rate of return
increased 10 basis points (0.10%) from 1.84% to 01.94%.
At its March meeting, the Federal Open Market Committee (FOMC) updated its economic
projections and trimmed the number of anticipated interest rate increase in 2019 from two to
zero. Although interest rates started the quarter with a stable tone, rates ultimately fell with
the ten-year Treasury note ending March 2019 at a yield of 2.4%. Because of possibility that
the economy may be nearing the end of its long recovery cycle, the Town’s current investment
strategy is to hedge that risk by extending maturities (duration) by focusing on the purchase of
new investment opportunities in the two to three-year maturity range.
PAGE 2 OF 2
SUBJECT: SECOND QUARTER INVESTMENT REPORT (JANUARY THROUGH MARCH) FOR
FISCAL YEAR 2018/19
DATE: MAY 6, 2019
S:\COUNCIL REPORTS\2019\05-21-19\Investment Report\Staff Report.FINAL.docx 5/16/2019 10:37 AM SLL
CONCLUSION:
Staff recommends that the Town Council receive the Third Quarter Investment Report (January
through March 2019) for Fiscal Year 2018/19.
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
Attachment:
1. Third Quarter Investment Report for FY 2018/19 (January through March 2019)