BOARD MEETING DATE: March 4, 2005
AGENDA NO. 22
Investment Oversight Committee
SYNOPSIS:
The Investment Oversight Committee met Friday, February 18, 2005 and discussed various issues detailed in the Committee report. The next Investment Oversight Committee meeting is scheduled for Friday, May 20, 2005 at 12:00 noon in Conference Room CC2.
RECOMMENDED ACTIONS:
- Receive and file this report;
- Reapprove the existing AQMD Annual Investment Policy; and
- Reauthorize the Los Angeles County Treasurer to invest and reinvest AQMD funds.
Gary Burton, Acting Chair
Investment Oversight Committee
Attendance: Present were Committee members, Michael Antonovich, Gary Burton, David E. Ertel and Paul Sundeen.
Investment Committee Action Items:
Quarterly Report of Investments: Reviewed the quarterly investment report to the Governing Board. For the month of December 2004, the AQMD’s weighted average yield on total investments of $246,408,575, from all sources, was 2.08%. The allocation by investment type was 80.1% in the Los Angeles County Pooled Surplus Investment Fund (PSI); 16.2% in the State of California Local Agency Investment Fund (LAIF); and 3.7% in Federal Agency securities. The Committee approved the quarterly report.
Approval of Annual Investment Policy and Delegation of Authority to Appointed Treasurer to Invest AQMD Funds: The Committee reviewed the Annual Investment Policy, which is unchanged from the current year, and discussed the renewal of its delegation of authority to its treasurer. The AQMD Annual Investment Policy and the reauthorization of the Los Angeles County Treasurer to invest and reinvest AQMD funds were recommended for approval at the March 4, 2005 meeting of the Governing Board.
Investment Committee Discussion Items:
Financial Market Update: Terry McGuire briefed the Committee on the economy and the interest rate outlook. In summary, Mr. McGuire stated that the economy is continuing on a path of moderate growth with steady improvement in job creation and manufacturing, while the consumer and retail sales continue to do well. As expected, the Federal Reserve increased the Federal Funds Rate for the 6th time in ten months by 25 basis points (bp) to 2.5%. Another 25 bp increase is expected in 6 weeks as the Federal Reserve continues to increase the Fed Funds rate at a measured pace. The core Producer Price Index (PPI) increased 0.9% for January, the highest one-month increase in 6 years (the full PPI increase 0.3% compared to the expected 0.2%). The Consumer Price Index (CPI) will be announced on February 23 and watched closely as an inflation indicator. The weakening dollar has remained steady over the past 3 months, but it is already being reflected in the price of imported goods that rose 0.9% in January (0.2% excluding oil). The yield curve may not flatten further, and the entire curve is expected to start to shift upward throughout 2005 if current fiscal and monetary policies continue. Iraq, terrorism threats and high oil prices remain the major uncertainties facing the economy.
Calendar Year 2005 Committee Meeting Dates: For CY 2005, quarterly Investment Oversight Committee meeting dates are Friday, February 18, Friday, May 20, and Friday, November 18 for the quarterly Investment Oversight meetings. The August quarterly meeting was cancelled in conjunction with the cancellation of all AQMD Board and Committee meetings during the month of August 2005.
Other Business: None
Public Comment: None
/ / /