2017-06-29 Special Meeting Agenda

INVESTMENT OF SURPLUS FUNDS POLICY


Interest Rate Risk
The investment officer shall seek to minimise the risk of a change in the market value of the portfolio
because of a change in interest rates. This would be achieved by measuring the investment term
against the cash flow requirements of Council and structuring the portfolio accordingly. This will avoid
having to sell securities prior to maturity in the open market. Secondly, interest rate risk can be limited
by investing in shorter term securities.

Maintenance of liquidity
The investment portfolio will maintain sufficient liquidity to meet all reasonably anticipated operating
cash flow requirements of Council, as and when they fall due, without incurring significant transaction
costs due to being required to sell an investment. For these purposes, illiquid investments are
defined as investments that are not publicly traded in sufficient volume to facilitate, under most
market conditions, prompt sale without severe market price effect.

Examples include:
 investment in private placements;
 a security that is not supported or priced by at least two approved brokers/securities dealers;
 sub investment grade (i.e., a lower than rating BBB- (Standard and Poor’s) or equivalent), and
   in most cases, BBB rated investments; and
 unrated securities.

Return on investments
The portfolio is expected to achieve a market average rate of return and take into account Council’s
ethical investment appetite, risk tolerance, current interest rates, budget considerations, and the
economic cycle. Any additional return target set by Council will also consider the risk limitations,
ethical and prudent investment principles and cash flow characteristics identified within this policy.

Comparison of performance
For performance purposes, the portfolio will be compared to the Bloomberg AusBond Bank Bill Index
and/or the Bank Bill Swap Reference Rate over a rolling one-year period. The benchmark target is
to be set equal to or above the benchmark yield and consider the expected types of securities held
in each portfolio. In comparing performance, the portfolio will be market valued and take into account
all coupons, deposits and withdrawals to / from the portfolio.


ROLES AND RESPONSIBILITIES

Authorised personnel
The Director Corporate Services and the Manager Financial Services are authorised to invest funds
at their discretion in investments consistent with this policy and legislation.

The Manager Financial Services will report to Council for investment guidelines and oversight of
investment activities for the purposes of this policy.

Internal controls
The Manager Financial Services in consultation with the Director Corporate Services shall establish
internal controls and processes that will ensure investment objectives are met and that the
investment portfolios are protected from loss, theft or inappropriate use.




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