Presenting Investment Information to Your Governing Board - - PowerPoint PPT Presentation

Presenting Investment Information to Your Governing Board

April 17, 2013

Rick Phillips

President and Chief Investment Officer

Rick.Phillips@FTNMainStreet.com 702-575-6666

California Municipal Treasurers Association

Annual Conference

Disclosure

The views expressed herein are those of the speaker and do not necessarily represent the views of FTN Financial Main Street Advisors, LLC or its affiliates. Views are based on data available at the time of this presentation and are subject to change based on market and other conditions. We cannot guarantee the accuracy or completeness of any statements or data. The information provided does not constitute investment advice and it should not be relied upon as such. It is not a solicitation to with respect to an investment strategy or investment product and is not a solicitation to buy and/or an offer to sell securities. It does not take into account any investor’s particular investment objectives, strategies, tax status, or investment horizons. All material has been obtained from sources believed to be reliable, but we make no representation or warranty as to its accuracy and you should not place any reliance on this information. Past performance is no guarantee of future results. FTN Financial Group, FTN Financial Capital Markets, and FTN Financial Portfolio Advisors are divisions of First Tennessee Bank National Association (FTB). FTN Financial Securities Corp (FFSC), FTN Financial Main Street Advisors, LLC, and FTN Financial Capital Assets Corporation are wholly owned subsidiaries of FTB. FFSC is a member of FINRA and SIPC— http://www.sipc.org/. FTN Financial Group, through FTB or its affiliates, offers investment products and services. FTN Financial is not registered as a Municipal Advisor.

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The Foundation of an Investment Program – 53600.5

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GFOA Model Investment Policy

Monthly Reporting Requirements

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53607: The authority of the legislative body to invest or to reinvest funds of a local agency, or to sell or exchange securities so purchased, may be delegated for a one-year period by the legislative body to the treasurer of the local agency, who shall thereafter assume full responsibility for those transactions until the delegation of authority is revoked or expires, and shall make a monthly report of those transactions to the legislative body. Subject to review, the legislative body may renew the delegation of authority pursuant to this section each year.

Trade Dt SetDt Side Security Cusip Issuer Price Quantity Coupon Principal Acc Int YTM 3/8/13 3/14/13 Buy FNMA 0 3/4 03/14/17 3135G0VM2 FNMA 99.87500000 25,000,000.00 0.750 24,968,750.00 0.00 0.778 3/14/13 3/14/13 Sell CSCO 1.625 03/14/14 17275RAJ1 Cisco 101.23800000 (20,000,000.00) 1.625 (20,247,600.00) 0.00 1.374 3/19/13 3/26/13 Buy MDT 1 3/8 04/01/18 585055BA3 Metronic 99.85000000 5,000,000.00 1.375 4,992,500.00 0.00 1.421 3/20/13 3/26/13 Buy SYK 1.3 04/01/18 863667AD3 Stryker 99.56500000 20,000,000.00 1.300 19,913,000.00 722.22 1.357 3/20/13 3/21/13 Sell T 2 04/30/16 912828QF0 US Treasury 104.91796875 (20,000,000.00) 2.000 (20,983,593.75) 155,801.10 0.385 3/28/13 4/1/13 Sell T 1 3/4 03/31/14 912828KJ8 US Treasury 101.57031250 (60,000,000.00) 1.750 (60,942,187.50) 2,868.85 0.194 3/28/13 4/1/13 Buy FNMA 0 1/2 09/28/15 3135G0NV1 FNMA 100.34780000 20,000,000.00 0.500 20,069,560.00 833.33 0.331 3/28/13 4/1/13 Buy T 2 1/4 01/31/15 912828MH0 US Treasury 103.69921876 25,000,000.00 2.250 25,924,804.69 93,232.04 0.241

Sample Excel Transaction Report

Sample Inv. Management Software Report

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Quarterly Reporting Requirements

(Optional)

53646 (b) (1): The treasurer or chief fiscal officer may render a quarterly report to the chief executive officer, the internal auditor, and the legislative body of the local agency. If you do provide a quarterly report (which you should!), they must:

• Be Submitted within 30 days After the Quarter End
• Include: Investment Type, Issuer, Maturity Date, Par Amount, Dollar

Amount Invested, Description of Funds Managed by an Outside Party (including Securities Lending), the Market Value and Source for Any Security Managed by an Outside Party that is Not a Local Agency or in LAIF,

• State that the Portfolio is in Compliance with the Policy or Manner

in which it is Out of Compliance

• State the Ability of the Entity to meet its Expenditure Requirements

for the Next 6 Months or Explain Why it Cannot

Sample Report

6 Inv. Type Issuer Market Value Dollar Amt Inv Maturity Date Par Value Price Source

Market values of all securities are provided by the City’s custodian

Recommended Additional Reports - Compliance

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Recommended Additional Reports - Safety

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Recommended Additional Reports - Safety

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Recommended Additional Reports - Safety

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Recommended Additional Reports - Safety

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Recommended Additional Reports - Safety

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Data Source: Bloomberg

Recommended Additional Reports - Safety

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Distribution by Type

Recommended Additional Reports - Safety

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Recommended Additional Reports - Liquidity

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(City of Los Angeles Monthly Investment Report)

Recommended Additional Reports - Liquidity

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Recommended Additional Reports - Yield

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Recommended Additional Reports - Yield

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“Market Rate of Return” -- Portfolio Benchmarking

Yield Return= Portfolio’s Weight Average Yield

+ Accrued/Received Interest +/- Amortization or Premiums/Discounts +/- Realized Gains/Losses Average Daily Book Balance for the Period

Book Return= Total Return=

+ Accrued/Received Interest +/- Realized Gains/Losses +/- Unrealized Gains/Losses Time Weighted Invested Market Value for the Period

Data Source: Bloomberg

2 4 6 8 10 12 14 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Percent

2Yr T-Note: Book Return* vs. Total Return

TRR BRR

*Book Return: 12 Month Average of Month End Yields

19 Total Return Book Return

Recommended Additional Reports - Yield

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Recommended Additional Reports - Yield

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Total Rate of Return vs Benchmark

Standard of Prudence

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53600.3: “When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in

a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs

• f the agency. Within the limitations of this section and considering

individual investments as part of an overall strategy, investments may be acquired as authorized by law.

Standard of Prudence – “Like Capacity”

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County Size* WAM (Yrs) YTM Report Date Fresno $2.470 2.62 1.18% Feb-2013 San Francisco $4.797 2.50 0.93% Feb-2013 Yolo $0.124 1.38 0.80% Dec-2012 Los Angeles $22.274 1.88 0.65% Jan-2013 Santa Clara $4.600 1.31 0.58% Dec-2012 San Mateo $2.785 1.79 0.49% Feb-2013 Monterey $1.035 1.16 0.49% Dec-2012 San Bernardino $4.379 1.07 0.47% Feb-2013 Napa $0.497 0.75 0.46% Feb-2013 San Diego $6.764 0.96 0.43% Dec-2012 Orange-Pool $3.259 0.82 0.41% Feb-2013 Riverside $5.087 1.23 0.37% Dec-2012 Orange-Education Pool $2.881 0.76 0.35% Feb-2013

*Billions Sources: Entities’ websites

Sorted By YTM

Recommended Additional Reports - LAIF

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Data Source: State of California’s Treasurer’s Website, calculations are by FTN Main Street

Data Source: State of California’s Treasurer’s Website, calculations are by FTN Main Street

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Recommended Additional Reports - LAIF

Loans to the State

Recommended Additional Reports - LAIF

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Data Source: State of California’s Treasurer’s Website, calculations are by FTN Main Street

Recommended Additional Reports – Economic/Market

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Recommended Additional Reports – Economic/Market

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Data Source: Federal Reserve

Recommended Additional Reports – Economic/Market

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Data Source: FreeLunch.com