The primary objectives of investment activities, in order of priority, shall be safety, liquidity and yield:
(A) Safety. Safety of principal is the foremost objective of the investment program. Investments shall be undertaken in a manner that seeks to ensure that preservation of capacity in the overall portfolio. This is accomplished by:
(1) Limiting investments to the securities authorized by this policy;
(2) Pre-qualifying the financial institutions, brokers/dealers and advisors with which the town will do business;
(3) Diversifying the investment portfolio so that potential losses on individual securities will not significantly affect the safety of the portfolio; and
(4) Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturing.
(B) Liquidity. The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. This is accomplished by:
(1) Structuring the portfolio so that securities mature concurrent with cash needs to meet anticipated demands;
(2) The portfolio should consist largely of securities with active secondary or resale markets; and
(3) A portion of the portfolio should be placed in money market funds or local government pools which offer same-day liquidity for short-term funds.
(C) Yield. The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to the safety and liquidity objectives described in division (B) of this section.
(Res. R-18-02, passed 1-30-2018)