Quarterly Investment Report for the 3 months ended 09-30-21
CITY OF ENCINITAS
INVESTMENT REPORT
MEMORANDUM
Three Months ended September 30, 2021
TO: City Council
VIA: Pamela Antil, City Manager
FROM: Teresa S. McBroome, Director of Finance/City Treasurer
DATE: February 1, 2022
SUBJECT: City of Encinitas Investment Report for the three (3) months ended September 30,
2021
It is the practice of the Finance Department to report on the status of City investments to the City
Council on a periodic basis. Currently, the process is to report investment positions and results
quarterly via memorandum, with attachments showing positions and earnings by investment and
in summary. This report covers only the City’s Pooled Investment fund (the “Pool”.) It does not
cover monies invested by the City’s bond trustee, which are reported on an annual basis.
The Pool had an investable balance of $108.6 million at September 30, 2021, compared to an
average investable balance for the three months ended September 30, 2021 of $116.4 million.
The size of the pool varies throughout the year depending upon cash flow. Several factors have
a significant impact on cash flow. Property tax revenue is received primarily in December,
January, April, and May, while debt payments typically fall in February, April, August, and October.
In addition, large payments on capital projects can happen throughout the year. The chart below
shows the monthly portfolio balance over the last five years.
The City utilizes a variety of investment vehicles, including direct investments and indirect
investments. Direct investments are primarily fixed income securities issued by the US Treasury
and several US Gov’t Agencies, such as the Federal National Mortgage Association (FNMA) and
the Federal Home Loan Mortgage Corporation (FHLMC). Indirect investments include money
market funds and pooled investments funds managed by other agencies, such as the California
Local Agency Investment Fund. Indirect investment balances are generally available to the City
on a next day basis and are classified as “liquid” meaning available to pay current demands.
Monies invested in direct securities can only be accessed via the maturity of a security or selling
the security prior to maturity. The final maturities on the City’s direct securities vary from less
than one month to under five years. The City has overnight liquidity, including cash in the bank,
of $18.1 million at September 30, 2021.
The Pool earned $388,307 the first three months of FY 2021-22 for an annualized return of 1.32
percent. This compares to the City’s adopted performance benchmark of the one (1) year
constant maturity Treasury index which averaged a .08 percent yield over the twelve months
ended September 30, 2021.
The market value of the City’s direct investments is more than their carrying value by $1,053,440
as of September 30, 2021, meaning that the portfolio has unrealized gains on securities held.
Since the City has never had to sell a security prior to maturity, any unrealized gains or losses
would only constitute a timing difference.
The public’s monies are extremely safe and well-diversified and follow the City’s adopted
investment policy and the overall direction of the City Council.
ATTACHMENTS – Portfolio Management and Interest Earnings Reports
FY 2021-22 June 30, 2022 March 31, 2022 Dec. 31, 2021 Sep. 30, 2021
Book Value 108,584,422$
Market Value 109,637,863$
Unrealized Gain/(Loss)1,053,441$
Unrealized Gain/Loss as % of Book Value 0.97%
Effective Rate of Return 1.32%
Average Yield To Maturity 1.31%
Average Maturity (Years)1.90
Investment Earnings Year to Date 388,307$