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III. <br /> <br />e <br /> <br />Interest Rate Risk <br />The City of University City/General Fund will minimize the risk that the <br />market value of securities in the portfolio will fail due to changes in <br />general interest rates, by: <br /> <br />Structuring the investment portfolio so that securities mature to <br />meet cash requirements for ongoing operations, thereby avoiding <br />the need to sell securities on the open market prior to maturity. <br />Investing operating funds primarily in shorter-term securities. <br /> <br />Liquidity <br />The investment portfolio shall remain sufficiently liquid to meet all operating <br />requirements that may be reasonably m~ticipated. This is accomplished by <br />structuring the portfolio so that securities mature concurrent with cash needs to <br />meet anticipated demands. A portion of the portfolio also may be placed in bank <br />deposits or repurchase agreements or overnight investments that offer same-day <br />liquidity for short-term funds. <br /> <br />Yield <br />The investment portfolio shall be designed with the objective of attaining a market <br />rate of return tl~roughout budgetary and economic cycles, taking into account the <br />investment risk constraints and liquidity needs. Return on investment is of <br />secondary importance compared to the safety and liquidity objective described <br />above. The core of investments are limited to relatively low risk securities in <br />anticipation of earning a fair return relative to the risk being assumed. Securities <br />shall not be sold prior to maturity with the following exceptions: <br /> <br />A security with declining credit may be sold early to minimize loss of <br />principal. <br />A security swap would improve the quality, yield or target duration in the <br />portfolio. <br />Liquidity needs of the portfolio require that the security be sold. <br /> <br />Standards of Care <br /> <br />Prudence <br />The standard of care to be used by investrnent officials shall be the <br />"prudent person" standard and shall be applied in the context of managing <br />an overall portfolio. Investment officers acting in accordance with written <br />procedures and this investment policy and exercising due diligence shall <br />be relieved of personal liability for an individual security's credit risk or <br />market price changes, provided deviations from expectations are reported <br />in a timely fashion to the governing body and the liquidity and the sale of <br /> <br /> <br />