REPORT TO COUNCIL
SUBJECT
Title
Action on Investment Management Services Agreement with PFM Asset Management LLC and Approval of Related Budget Amendment [Council Pillar: Manage Strategically Our Workforce Capacity and Resources]
Report
BACKGROUND
The City of Santa Clara (City) internally manages the investment of its pooled portfolio, which as of May 31, 2020 totaled approximately $770 million. Of this amount, approximately $64 million is invested with the State's Local Agency Investment Fund (LAIF) to meet the City's liquidity needs. The City has six approved broker/dealers from which securities are purchased. Portfolio accounting and reporting is currently performed using SunGard software.
The Department of Finance currently manages the investment of the City's pooled portfolio in accordance with the City's Investment Policy and state law. With limited capacity and resources to effectively research, analyze, and monitor corporate and other investments, staff has conservatively invested City funds mainly in Treasury and Government Agency Notes and LAIF. Although the pooled portfolio is diversified among Treasury and Agency Notes and LAIF, the City does not have any investments in other allowable investments that could provide higher yields for the City, such as commercial paper, corporate notes, mortgage-backed securities, and municipal notes.
By engaging an outside investment management firm, the City can leverage the firm's many years of investment experience and dedicated credit and risk management personnel. The City has the potential to generate higher earnings with access to sector specialists and enhanced market insight.
DISCUSSION
On January 21, 2020, the City released a Request for Proposal (RFP) No. 19-20-36 seeking proposals from qualified financial consulting firms to provide investment advisory and portfolio management services to the City. The RFP was published on BidSync, the City's e-procurement system. A total of 57 firms viewed the RFP,...
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