Investment Policy Update 2015

1

Investment Policy

City of Corona

Introduction

■ Three objectives: ■ Safety■ Liquidity■ Yield

■ Maintain compliance with Government Codes

2

■ Establish overall guidelines for the management and investment of temporary inactive cash

Investment Policy

Investment Management

CA Government Code

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Sections

■ Allowable investment (§53601)

■ Qualified dealers (§53601.5)

■ Credit rating requirement (§53601)

■ Reporting (§53601)

■ Policy review requirement (§53646)

Treasury Committee

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Responsibilities

■ Oversees investment activities

■ Issues monthly investment reports

■ Meets quarterly with investment advisor

■ Investment Policy approved annually by Council

Investment Advisor

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Chandler Asset Management

■ Providing investment advisory services to the City since 2006

■ RFP in May 2014■ Re-selected Chandler Asset

Management ■ Contracted through June 2017

Chandler Asset Mgmt.

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Ownership■ Independent &

Employee-Owned■ Fixed income specialist

since 1988 ■ Serve institutions with

public sector focus■ Fully aligned with client

interests

Assets Under Management$10.2 Billion

Chandler Asset Mgmt.

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The Team■Skilled Fixed Income

Team■ Strategic team-based

decision making ■ Disciplined, forward-

thinking investment philosophy and process

Programs■Custom Investment

Programs■ Designed to address your

objectives and policies■ Proactive approach to

communication ■ Full suite of timely,

comprehensive reports

Portfolio

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Summary

Portfolio

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Performance

Investment Policy

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Changes■ Credit rating requirement lowered from A2/A to A

■ Consistent with California Code■ Provides additional flexibility in managing portfolio■ Additional risk to portfolio is negligible

■ Maximum allowable investment in securitized asset class (MBS, ABS, and CMOs) from 10 % to 15%■ California Government Code - 20%■ Forecasting total allocation to grow slightly over 10%

■ Supranational Securities will not be added ■ California Code added as eligible investment in 2015

Economic Outlook

11

0

50

100

150

200

250

300

350

400

450

(00

0's

)

Nonfarm Payroll (000's)

Economic Outlook

12

Economic Outlook

13

Economic Outlook

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(0.5)

0.0

0.5

1.0

1.5

2.0

2.5

Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15

CPI - year over year %

CPI CPI Core

(0.5)

0.0

0.5

1.0

1.5

2.0

2.5

Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15

PCE - year over year %

PCE PCE Core

(0.5)

0.0

0.5

1.0

1.5

2.0

2.5

Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15

CPI - year over year %

CPI CPI Core

(0.5)

0.0

0.5

1.0

1.5

2.0

2.5

Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15

PCE - year over year %

PCE PCE Core

Source: US Bureau of Labor Statistics Source: US Bureau of Economic Analysis

Economic Outlook

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Yield on the Two-Year NoteMay 2013 through May 2015

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

February 28, 2015 and May 31, 2015

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

2/28/15 5/31/15

Source: Bloomberg

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Conclusion & Questions