Summary
To: Town Commission
From: Stefan Massol, Finance Director
Date: 12/7/2021
______________________________________________________________________
Subject:
Title
Review of Investments FY 2020-21
Summary:
Staff will provide an overview of investment activity from fiscal year 2020-21 compared to the prior fiscal year.
End
Body
Background/Problem Discussion: The Town of Belleair increased investment activities in recent years. This was partly due to increased cash balances on hand in addition to rising rates of return in 2017 for the Town’s local government investment pool (LGIP) funds.
The Town’s investment policy was last revised in 2018 with Resolution 2018-20. The update allowed the Town to invest in other 2A7-like LGIP funds in addition to the Florida State Board of Administration fund. A copy of the investment policy is attached.
Unfortunately, rates of return for the LGIPs have decreased substantially since early 2019. As of November 22nd the 7-day average rate is 10 basis points or 0.1% annual return. As a 2A7-like fund the risk of loss is extraordinarily low. Additionally the investments are considered highly liquid and funds can easily be withdrawn within 24 hours.
It is conceivable that the Town could move some amount of investment over to CDs, where a higher rate of return may be possible. CDs cannot comprise more than 30% of the Town’s portfolio based on the policy, however roughly $4M could be moved to laddered CDs which may generate additional yield. The additional yield would likely be in the range of $4000 annually in today’s generally low-rate environment.
Finance Board will be reviewing this information at the December 8th meeting.