Credit risk is the risk that a security or a portfolio will lose some or all of its value due to a real or perceived change in the ability of the issuer to repay its debt. The city shall mitigate credit risk by adopting a diversification strategy as follows: It is the policy of the City of Lyndon to diversify its investment portfolios within the restrictions of state and federal law. KRS 66.480(2)(a) limits local government investment in securities to 20% of total investment with no more than 5% of total investment in a single issuer absent exceptions in KRS 66.480(2)(d)(1)-(4). Furthermore, local governments are restricted from investing 40% of allowed securities investment total in mutual funds, unless the investment is in a mutual fund consisting solely of the investments authorized under subsection (1)(a), (b), (c), (h), or (i) of KRS 66.480, or any combination thereof, and exchange traded funds, individual equity securities, and individual high-quality corporate bonds by KRS 66.480(2)(b).
(Ord. 8-26-19A, passed 9-23-19)