Staff ReportPREPARED BY: STEVE CONWAY
Finance Director/Town Treasurer
Reviewed by: Assistant Town Manager Town Attorney Finance
S:\COUNCIL REPORTS\2016\06-21-16\Investment Report 3rd Qtr\Staff Report - Investment Report FINAL.doc
MEETING DATE: 06/21/16
ITEM NO: 3
COUNCIL AGENDA REPORT
DATE: JUNE 8, 2016
TO: MAYOR AND TOWN COUNCIL
FROM: LAUREL PREVETTI, TOWN MANAGER
SUBJECT: APPROVE THIRD QUARTER INVESTMENT REPORT (JANUARY THROUGH
MARCH 2016) FOR FISCAL YEAR 2015/16
RECOMMENDATION:
Approve the attached Third Quarter Investment Report (January through March 2016) for Fiscal Year
2015/16.
DISCUSSION:
Attached for Council consideration and approval is the Third Quarter Investment Report for FY
2015/16, for the period January through March 2016.
The Town’s weighted portfolio yield of 0.76% is still outperforming the Local Agency Investment
Fund (LAIF) yield of 0.40% (difference of 36 basis points). Therefore, 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 did not change from the rate earned in the
second quarter.
In mid-December 2015, for the first time since before the financial crisis in 2008, the Federal Open
Markets Committee (FOMC) raised the Fed funds target rate. The Committee increased its benchmark
rate 0.25% to a range of 0.25% to 0.50%. Despite this action, interest rates fell across most of the
maturity spectrums over the first quarter of 2016. Employment growth remained strong, and the
unemployment rate of 4.9% has decreased by 50% since its high in October, 2009. Global commodity
prices remain low but crude oil prices began to bounce back in the first quarter, rising 3.4% from lows
experienced in December. Market expectations anticipate another Federal Reserve interest rate increase
sometime in late calendar year 2016 but that expectation is tempered by low inflation and a slowdown
in new job growth which may moderate any increases in interest rates in 2016.
Staff is concentrating on short-term (two years or less in maturity) for its new investments with a
potential shift from treasuries as they mature to high quality corporate medium term notes (higher yield
while preserving safety of principal) as the rewards for longer term investments in the three to five year
maturity do not have adequate spreads to justify the risk of holding longer term maturities.
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: APPROVE THIRD QUARTER INVESTMENT REPORT (JANUARY THROUGH
MARCH 2016) FOR FISCAL YEAR 2015/16
JUNE 8, 2016
Attachment:
1. Third Quarter Investment Report for FY 2015/16 (January through March 2016)