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<br />Approved by Finance Committee-December 18,2006 <br /> Proposed Investment Policy <br /> The City of Louisville <br />Scope <br />The provisions of this investment policy shall apply to all funds of the City of Louisville (the "City"). <br />Except for cash in certain restricted and special funds, the City shall pool all excess cash for invest- <br />ment purposes. The investment income derived from the pooled investment account shall be allocated <br />to the contributing funds based upon the proportion of the respective average balances relative to the <br />total pooled balance. Interest earnings shall be distributed to the individual funds on a monthly basis. <br />Obiectives <br />In order ofpriority,t he primary objectives of investment activities shall be safety, liquidity, and yield: <br />. Safety <br /> Investments shall be undertaken in a manner to ensure the preservation of capital in the overall <br /> portfolio through the mitigation of credit risk and interest rate risk. <br />. Liquidity <br /> The investment portfolio shall remain sufficiently liquid to meet all operating requirements that <br /> may be reasonably anticipated. This is accomplished by structuring the portfolio so that securities <br /> mature concurrent with cash needs to meet anticipated demands. Furthermore, since all possible <br /> cash demands cannot be anticipated, the portfolio should consist largely of securities with active <br /> secondary or resale markets. Alternatively, a portion of the portfolio may be placed in money mar- <br /> ket mutual funds of local government investment pools (LGIPs) which offer same-day, constant <br /> dollar liquidity for short-term funds. <br />. Yield <br /> The investment portfolio shall be designed with the objective of attaining a market rate of return <br /> throughout budgetary and economic cycles, taking into account the investment risk constraints and <br /> liquidity needs. Securities generally shall be held to maturity with the following exceptions: <br /> 1) A security with a declining credit may be sold early to minimize loss of principal. <br /> 2) A security swap would improve the quality, yield, or target duration of the portfolio. <br /> 3) Liquidity needs of the portfolio require the security to be sold. <br />Dele2ation of Authoritv <br />The Finance Director shall be the designated investment officer of the City and shall be responsible for <br />all investment decisions and activities, under the direction of the City Manager. <br /> 1 <br />