Eastern Municipal Water District
California

Treasurer Report
4544
Received and Filed
Oct 21, 2020 9:00 AM

Treasurer's Report for August 2020

Information

Department:FinanceSponsors:
Category:Treasurer's ReportMeeting Workflows:Board Admin Committee Workflow

Background

Attached is the Portfolio recap for August 2020.  Some of the highlights are:

 

1.              The overall portfolio average interest rate was 0.94 percent in August 2020, a decrease of 0.12 percent from July 2020.

2.              The market value of the portfolio, including District holdings and debt proceeds, for August 2020 was $562.6 million versus a book value of $559.8 million.  July 2020 market value was $539.1 million versus a book value of $535.0 million.

 

As shown in the comparison below, the interest rates for three-year treasury bills ended the month of August 2020 at 0.15 percent, or four basis points higher than the rate in July 2020.  The U.S. Treasury bond yield curve is no longer inverted, meaning that the yield on short term maturities is lower than those of medium-term maturities, as in a normal curve.  The Federal Reserve lowered interest rates in two emergency rate cuts in March 2020, the first since 2008, by 0.50 percent and 1.00 percent, effectively bringing the Fed Funds rate to 0 percent.  The market is experiencing great volatility due to concerns on coronavirus and the uncertainty of its economic impact.  The Fed also implemented several liquidity boosting measures to help combat market and investor uncertainty. 

 

To safely navigate this turbulent and dynamic investment market, the Districts investment strategy is focused on conservative, short-term securities, with 49 percent of the Portfolio invested in securities, which mature within 60 days to ensure liquidity and protect principal.  The Districts investment strategy during Fiscal Year 2020-21 emphasizes greater diversification and relatively short duration risk with purchases of Federal Agencies (target of 32 percent of portfolio), highly rated corporate notes (target of 13 percent of portfolio) and municipal bonds (target of 17 percent of portfolio).  Investment targets are one to two-year maturities to reduce the impact of interest rate volatility while providing reasonable returns to meet the Districts objectives.

 

August 2020

July 2020

LAIF =

0.78%

LAIF =

0.92%

3 year Treasury =

0.15%

3 year Treasury =

0.11%

3-yr Treasury (Rolling 12-mo Avg.) =

0.90%

3-yr Treasury (Rolling 12-mo Avg.) =

1.01%

5 year Treasury =

0.28%

5 year Treasury =

0.21%

 

District Average Portfolio =

 

0.94%

 

District Average Portfolio =

 

1.06%

District Portfolio Days to Maturity =

289   

District Portfolio Days to Maturity =

300 

 

The entire Treasurers report will be available upon request at the October 21, 2020 Eastern Municipal Water District Board meeting.

Financial/Strat Plan/Enviro

FINANCIAL IMPACT:

 

None

 

STRATEGIC PLANNING GOAL/OBJECTIVE:

 

Financial Stability: Enhance and maintain the District’s strong financial position and credit quality by identifying and implementing specific opportunities to improve underlying financial metrics.

 

ENVIRONMENTAL IMPACT:

 

None

Recommendation

Receive and file this report.

Meeting History

Oct 1, 2020 4:00 PM  Board Administrative Committee Regular Meeting
draft Draft
RESULT:REVIEWED AT COMMITTEE
Oct 21, 2020 9:00 AM  Board of Directors Regular Meeting
draft Draft
RESULT:RECEIVED AND FILED