City council’s investment committee is taking more than $10 million from recently matured guaranteed investment certificates (GICs) to help fund programs and services this year.
During the committee’s virtual meeting on May 12, the committee approved a recommendation to withdraw $3,768,234 immediately from the moderate-term portfolio and have the municipality “maintain a 60/40 tactical mix by transitioning equity gains and excess cash into two fixed income mandates (high yield and investment grade).”
A second recommendation was to withdraw $2,309,940 immediately from the long-term portfolio and transition the remaining $4,053,356 into “equity/fixed income with a target overweight in equities up to 75 per cent.”
The two withdrawals from the GICs total $6,078,174; the remaining $4,053,356 from the maturing GIC was returned as cash and is now considered general investment funds.
Those recommendations were presented during city council’s recent regular meeting, with council unanimously approving the motions as part of the overall report about the city’s investments.
In an email to the Moose Jaw Express, finance director Brian Acker explained that the term “tactical mix” refers to purposely maintaining a 60/40 mix of fixed income to equities and doing so in a carefully planned and implemented manner. The equities and cash were transitioned to meet the 60/40 objective, while the fixed income mandates focused on high yield and investment grade.
“The target for equities for the investment portfolio is 70 per cent, and at this point in time, the investment manager is recommending to overweight equities slightly to 75 per cent of the long-term portfolio,” said Acker. “This is within the limits established in the investment policy for the long-term portfolio, which allows between 55 and 90 per cent to be in equities with the target being 70 per cent.”
RBC Dominion Securities manages the City of Moose Jaw’s investment portfolios, which together total $111,922,465.83.
In a report to city council on Nov. 21, 2020, Acker laid out some projects and services the money from the now-matured GICs would cover. Some initiatives included:
- Taking $2.51 million in combined earnings from the capital expenditure fund equity and land development fund to support transportation and parks and recreation capital projects
- Using $2.7 million from the land development fund to upgrade the Moose Jaw Agri-Industrial Park to support the Great Plains Power Station
- Using $122,052 from the perpetual care fund for cemetery maintenance
- Taking $38,460 in annual investment earnings and placing them into the parking reserve account
- Reinvesting $698,375 into the police accumulated surplus
- Taking earnings of $22,648 and putting them into the housing reserve account
Any shortfalls arising from the 2021 drawdowns will be adjusted for in the 2022 drawdown request, the report added.
The next regular council meeting is Monday, June 14.
