Sarasota County Investment Policy 2018

Sarasota County Investment Policy 13 review and pursue those opportunities that are consistent with long term optimization (active management). Outside consulting managers may be used to direct a portion of the portfolio using approved investments to enhance returns, subject to approval by the Comptroller. 2. Portfolio Maturity Management When structuring the maturity composition of the portfolio, it is the policy of the County to evaluate current and expected interest rate yields, by evaluating the general economic conditions. Whenever interest rates are expected to increase in the near future, actions will be taken by the Treasury Management staff to shorten the portfolio’s Effective Duration. Accordingly, whenever interest rates are expected to decrease, the Effective Duration of the portfolio will be lengthened, as appropriate. Specific procedures for evaluating the general economic conditions shall be incorporated into the Investment Procedures. 3. Bond Swaps It shall be the policy of the County to pursue bond swaps as they may present themselves over the term of any investment. The following categories of bond swaps are considered appropriate for the County: a. Swaps to Increase Yield Market aberrations are often caused by supply and demand conditions for particular securities. For example, if a short supply exists for a particular maturity range, it may be advantageous to swap out of the security in a short supply and into another similar security in a different maturity range. b. Swaps to Reduce Maturity Market aberrations occasionally create a situation where longer maturity securities are yielding the same or less than securities with a shorter maturity. Portfolio quality can be improved by switching from the longer maturity security to the shorter maturity with little or no impact on portfolio performance. c. Swaps to Increase Portfolio Quality Market aberrations occasionally create a situation where certain higher risk securities yield the same or less than an equivalent lower risk security. Portfolio quality can be improved by switching from the higher risk security to a lower risk security little or no impact on portfolio performance. Temporary accounting losses on swaps can be incurred provided the loss is more than offset by the improvement in quality, shortening of duration or increasing yield. Procedures for evaluating and recording bond swaps shall be incorporated into the Investment Procedures. 4. Performance Measurement The investment objectives of the County’s portfolio are preservation of capital, liquidity and income. In order to assist in the evaluation of the portfolio’s performance, relative to an acceptable level of risk, the Clerk shall use a performance benchmark. The most comparable