Page 70 - City of Bedford FY21 Budget

three-month Treasury Bill portfolio will be the minimum yield objective.

2. Special Revenue Funds

Suitability - Any investment eligible in the Investment Policy is suitable for Special
Revenue Funds.

Safety of Principal – All investments will be of high quality with no perceived default
risk. Market price fluctuations will occur. However, by managing Special Revenue
Funds to balance the short-term and long-term anticipated cash flow requirements of the
specific revenue/expense plan, the market risk of the Fund’s portfolio will be minimized.
No stated final investment maturity shall exceed the shorter of the anticipated cash flow
requirement or three years.

Marketability - Balancing short-term and long-term cash flow needs requires the short-
term portion of the Funds portfolio to have securities with active and efficient secondary
markets. Historical market “spreads” between the bid and offer prices of a particular
security-type of less than ten basis points will define an efficient secondary market.
Securities with less active and efficient secondary markets are acceptable for the long-
term portion of the portfolio.

Liquidity - A portion of the Special Revenue Funds are reasonably predictable.
However, unanticipated needs or emergencies may arise. Selecting investment maturities
that provide greater cash flow than the anticipated needs will reduce the liquidity risk of
unanticipated expenditures.

Diversification - Investment maturities should blend the short-term and long-term cash
flow needs to provide adequate liquidity and yield enhancement and stability. A
“barbell” maturity ladder may be appropriate.

Yield - Attaining a competitive market yield for comparable investment -types and
portfolio structures is the desired objective. The yield of an equally weighted, rolling six-
month Treasury Bill portfolio will be the minimum yield objective.

3. Capital Improvement Funds

Suitability - Any investment eligible in the Investment Policy is suitable for Capital
Improvement Funds.

Safety of Principal - All investments will be of high quality with no perceived default
risk. Market price fluctuations will occur. However, by managing Capital Improvement
Funds to not exceed the anticipated expenditure schedule, the market risk of the overall
portfolio will be minimized. No stated final investment maturity shall exceed the shorter
of the anticipated expenditure schedule or three years.

Marketability - Securities with active and efficient secondary markets are necessary in
the event of an unanticipated cash flow requirement. Historical market “spreads” between
the bid and offer prices of a particular security-type of less than ten basis points will

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