2020-07-10 Special Meeting Agenda

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INVESTMENT OF SURPLUS FUNDS POLICY

Investment officers are to manage the investment portfolios not for speculation, but for investment
and in accordance with the spirit of this policy. Investment officers are to avoid any transactions that
might harm confidence in Council and will consider the safety of capital and income objectives when
making investment decisions.
Ethics and conflicts of interest
Consideration will be given to ethical investment principles in determining the approved counterparty
for investment of funds.

Investment officers / employees shall refrain from personal activities that would conflict with the
proper execution and management of Council’s investment portfolio. This includes activities that
would impair the investment officer’s ability to make impartial decisions. This policy requires that
employees and investment officials disclose to the Chief Executive Officer (CEO) any conflict of
interest or any investment positions that could be related to the investment portfolio.
Delegation of authority
Authority for implementation of this policy is delegated by Council to the CEO in accordance with the
Local Government Act 2009, Section 257 (1) (b) — Delegation of local government powers.
Authority for the day-to-day management of Council’s Investment Portfolio is to be delegated by the
CEO to the Director Corporate Services and to the Financial Services Manager in accordance with
section 259 of the Local Government Act 2009, and subject to regular reviews with the Director
Corporate Services and CEO.

GUIDING PRINCIPLES
Council’s overall objective is to invest its funds at the most advantageous rate of interest available
to it at the time, for that investment type, and in a way that it considers most appropriate given the
circumstances. In priority, the order of investment activities shall be the preservation of capital,
liquidity, and return.
Preservation of capital
Preservation of capital shall be the principal objective of the investment portfolio. Investments are to
be performed in a manner that seeks to ensure security of principal of the overall portfolio. This would
include managing credit and interest rate risk with given risk management parameters and avoiding
any transactions that would prejudice confidence in Council or its associated entities.
Credit Risk
Council will evaluate and assess credit risk prior to investment. The investment officer will minimise
credit risk in the investment portfolio by prequalifying all transactions including the brokers / securities
dealers with which they do business, diversify the portfolio and limit transactions to secure
investments.

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.
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