Page 566 - Bedford-FY24-25 Budget

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.

Liquidity - Most capital improvements programs have reasonably predictable draw down
schedules. Therefore, investment maturities should generally follow the anticipated cash flow
requirements. Financial institution deposits, investment pools and money market mutual funds
will provide readily available funds generally equal to one month’s anticipated cash flow needs,
or a competitive yield alternative for short-term fixed maturity investments. A singular
repurchase agreement may be utilized if disbursements are allowed in the amount necessary to
satisfy any expenditure request. This investment structure is commonly referred to as a flexible
repurchase agreement.

Diversification - Market conditions and arbitrage regulations influence the attractiveness of
staggering the maturity of fixed rate investments for bond proceeds. Generally, if investment
rates exceed the applicable cost of borrowing, BEDFORD is best served by locking in most
investments. If the cost of borrowing cannot be exceeded, then current market conditions will
determine the attractiveness of diversifying maturities or investing in shorter and larger amounts.
At no time shall the anticipated expenditure schedule be exceeded in an attempt to bolster yield.

Yield - Achieving a positive spread to the cost of borrowing is the desired objective, within the
limits of the Investment Policy’s risk constraints. The yield of an equally weighted, rolling six-
month Treasury Bill portfolio will be the minimum yield objective for non-borrowed funds.

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