CCP 09-16-1993 - Laserfiche WebLink

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" , . '!his future project funding would presently l:e invested in the following types of invesbnents: * Money Market Instruments $ 850,000 70.8% * Zero-Coupon Instruments 350.000 29.2% (1996 Maturity) $1,200,000 100.0% Reconunended Pro-iect Fundincr by Investment Cateaorv * Money Market Instruments $ 150,000 12.5% * Zero-Coupon Instruments 350,000 29.2% * Mutual Fund Investment 700.000 58.3% $1,200,000 100.0% '!his recommended investment funding mix would require an interiln deviation from the City's adopted investment policy. Specifically, in=easing the stake in !llUtual fund investments from the =ent $600,000 level to about $1,300,000 would result in this category representing approximately 30% of the City's entire investment portfolio as compared to the 15% category maxiImIm referenced in the policy. Assuming that interest rates are returning to historical levels and not those seen in the Seventies and Eighties, Money Market yields may be in . the 2.50% - 3. 00% range in the next three years. '!he $700,000 invesbnent could generate approxilnately $60,000 in Money Market earnings over the next three years. An invesbnent in a quality, short-term govermnent security !llUtual fund mayl:e expected to approximate five-year treasury returns or about 5%. A $700,000 invesbnent in this option could generate approximately $110,000 in earnings over the next three years. Reauest for Interiln Deviation '!his estimated return premium for asstnning greater risk, while still maintaining liquidity, seems appropriate for an interiln (through 1996) period. I believe that this investment option prudently balances risk/reward considerations and is likely to result in a smaller PIR Fund contribution when the project begins. If you have any questions, please contact me. TRP/sjl .