HomeMy WebLinkAbout05-12-2016 BaraschRECEIVED
MAY p 9 2016
Goodwin, Heather
From: barascharc @aol.com
Sent: Monday, May 09, 2016 4:55 PM
To: Goodwin, Heather
Subject: May 12, 2016 Investment Oversight Committee Meeting Agenda Packet
Hi Heather,
Than you for providing me with a "Hard Copy" of the above referenced "packet" which I reviewed in detail over the past
weekend in anticipation of my upcoming three week overseas commitments.
Please consider this correspondence as my request to share my "personal observations /comments" with the entire City of
SLO Investment Oversight Committee Members and any invited guests that may attend the May 12, 2016 IOC meeting to
be held in the SLO City Council Hearing Room along with any members of the general public as well.
My initial observations /comments regarding the performance the City of SLO's Investment Portfolio for the first quarter of
2016 ending on March 31, 2016 are that the "Committee" endorsed investment policies & guidelines are indeed being
respected YET the performance results of our efforts are generally "POOR" and have been so for the past 2.5 years that I
have been appointed as the "Public Member"
Our investment returns for about $ 113.3 million generally continues to decline along with our so- called "Benchmark"
Average BAML Market
Yield (which is now at a whopping 0.77 % projected average yearly yield) leaves a lot of room for improvement and has
been falling steadily from about 1.5% some 30 months ago down to 1.1 % during the third quarter of 2015 thus yielding
less than $ 100,000 in total interest before expenses and any reasonable "cost of living adjustments" for the entire first
quarter of 2016.
As the "Public Member" of the IOC I ama ware of the city's 5 year maximum term duration for any municipal investment as
well as the need to purchase AA + /Aaa "grade paper" within the city's portfolio as well as the need to minimize overall
trading related expenses whenever
possible.
However, over at least the last six IOC meetings I strongly suggested that the "Committee" move nonproductive cash
deposits from the "On Demand" type of accounts (based on actual liquidity types of needs after defining the city's actual
month -to month cash flow needs) which has generally been accomplished) yet the actual rates of returns on on the
longer term invested funds have NOT been satisfactory at all.
It now appears that even though the total amount of assets within the "All City Investment Account" has remained
relatively constant and even increased a bit in excess of $ 113 million the real "net" rates of return have continued to
languish for the past 30 month period.
I would like to continue to suggest that the "City" seek out more productive local investment opportunities that may "spur"
additional local economic investments within our community and explore a larger portion of our available investment
portfolio in to longer term (up to 5 year)
treasury notes as soon as possible and in the process "shed" more of the low preforming corporate securities.
Hopefully The majority of The IOC can collectively acknowledge that proceeding in this direction will allow for the
realization of higher overall yields on both the City Managed Investments (which are presently yielding about .42% before
expenses) and the PFM Managed Investments (which are presently yielding about .87% before expenses) in the short
term future (one to two years) which may well increase significantly in
the longer term future.
Monitoring the public's investment assets are indeed difficult, yet generally both well managed & documented, BUT
increasing the public's assets are a much more difficult task in an age of rather restrictive municipal investment
requirements and the current period of generally low yielding investment returns.
Therefore, for the above reasons I find it difficult to personally confirm "Overall Investment Compliance" with our
1
comprehensive investment performance policies and adopted investment "benchmarks" traditionally monitored by our
committee and would therefore vote NO, if present to do so at the May 12, IOC Meeting.
In the event there may be any questions regarding this correspondence in my absence please contact me via Email at:
barascharc aol.com
Respectfully yours,
Steve Barasch, Public Member
SLO City Investment Oversight Commiteee
cc. Derek Johnson, Interim Finance & IT Director /Treasurer /Assistant City Manager, et al, and
All City Of San Luis Obispo Investment Oversight Committee Members, Invited Guests and Attendeing Members of
the Public
barascharcCcaol.com