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 ● 406-354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 12/03/2019
ITEM NO: 11
DATE: November 19, 2019
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Receive the First Quarter Investment Report (July through September2019)
for Fiscal Year 2019/20
RECOMMENDATION:
Receive the First Quarter Investment Report (July through September 2019) for Fiscal Year
2019/20.
DISCUSSION:
As of September 30, 2019, the Town’s weighted portfolio yield was 2.02% which trended below
the Local Agency Investment Fund (LAIF) yield of 2.28%. This difference was primarily due to
the LAIF portfolio’s weighted average maturity (WAM) of 173 days being below the Town’s
WAM of 493 days. Given the shorter WAM it is not unusual in the short run for LAIF yields to
outperform portfolios that have a longer average maturity. In recent months, staff in
consultation with the Town’s investment advisor have been extending maturities to capture the
higher yields associated with longer dated securities. Staff continues to replace matured or
called investments with similar investments with respect to maturity and credit quality. For the
First quarter, the Town’s weighted average rate of return decreased slightly by 3 basis points
(0.03%) from 2.05% to 2.02%.
For the quarter ending September 30, 2019, interest rates decreased across the yield curve
partially fueled by the Federal Open Market Committee (FOMC) decision on September 18,
2019 to further ease monetary policy by lowering the Federal funds target rate by 25 basis
points. Seven members of the Committee voted to lower the target funds range to 1¾ to 2
percent. Two members preferred maintaining the existing funds range of 2 percent to 2¼
percent and one member preferred lowering the range further . On October 30, 2019 the
FOMC voted to lower rates for the third time this calendar year by reducing the Federal funds
rate by another 25 basis points. This recent Federal action is consistent with the
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SUBJECT: Receive the First Quarter Investment Report (July through September2019) for
Fiscal Year 2019/20
DATE: November 19, 2019
DISCUSSION (Continued):
aforementioned strategy to extend maturity lengths on new purchases of securities to take
advantage of higher yielding securities in the 2 to 3-year maturity range.
CONCLUSION:
Staff recommends that the Town Council receive the First Quarter Investment Report (July
through September2019) for Fiscal Year 2019/20.
Attachment:
1. First Quarter Investment Report for FY 2019/20 (July through September 2019)