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3. Investment Objectives <br /> 111 <br /> The Town will invest idle funds based on the following objectives: <br /> A. Safety—The primary objective is the preservation of capital and the <br /> safeguarding of public funds by mitigating credit and interest rate risk. <br /> a. Credit Risk—The Township will minimize credit risk,which is the <br /> risk of loss due to the failure of the security issuer or backer. <br /> b. Interest Rate Risk—The Township will minimize interest rate risk, <br /> which is the risk that the market value of securities in the portfolio <br /> will fall due to changes in the market interest rates. <br /> B. Term—Investments will be scheduled to cover all expenditures. <br /> Investments will not be longer than one year for cash flow and all excess <br /> funds may be invested for longer than one year. <br /> C. Liquidity—The portfolio shall remain liquid to meet all operating <br /> requirements that may be reasonably anticipated. This is accomplished by <br /> structuring the portfolio so that securities mature concurrent with cash <br /> needs to meet anticipated demands. Furthermore, since all possible cash <br /> demands cannot be anticipated, the portfolio should consist largely of • <br /> securities with active secondary or resale markets. Alternatively, a portion <br /> of the portfolio may be placed in money market mutual funds or <br /> government investment pools which offer same-day liquidity for short- <br /> term funds. <br /> D. Yield—The investment portfolio shall be designed with the objective of <br /> attaining a market rate of return throughout budgetary and economic <br /> cycles, taking into account the investment risk constraints and liquidity <br /> needs. Return on investment is of secondary importance compared to the <br /> safety and liquidity objectives. The core of investments are limited to <br /> relatively low risk securities in anticipation of earning a fair return relative <br /> to the risk being assumed. Securities shall generally be held until <br /> maturity. <br /> 4. Pooling of Funds <br /> The Township will consolidate (pool) cash and reserves balances from all funds, except <br /> for those legally restricted by statutes, to maximize investment earnings and to increase <br /> efficiencies with regard to investment pricing, safekeeping and administration. <br /> 5. Authorized Investments <br /> The Town of White Bear will invest only in securities authorized by Minnesota Statute 475.66. . <br /> 2 <br />