Page 606 - Bedford-FY25-26 Budget

Return to Financial Policies

X. Strategy.

The investment maturity schedule shall correspond with Bedford’s projected cash flow needs. Remaining
maturities on individual investments purchased shall be no longer than 3 years.

With tax-exempt bond or loan proceeds, Bedford shall seek to comply with the arbitrage regulations and to
optimize yield while ensuring the safety of capital and liquidity. It is fiscally sound to earn and rebate excess
earnings, if necessary.

XI. Investment Strategies.

In order to minimize risk of loss due to interest rate fluctuations, investment maturities will not exceed the
anticipated cash flow requirements of the funds. Investment guidelines by fund-type are as follows:

1. Pooled Investment Funds

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

Safety of Principal - All investments shall be of high quality with no perceived default risk.
Market price fluctuations will occur. However, managing the weighted average days to maturity
of each fund’s portfolio to less than 270 days and restricting the maximum allowable maturity
to the shorter of the anticipated cash flow requirement or three years will manage the price
volatility of the portfolio.

Liquidity - Pooled Investment Funds require the greatest short-term liquidity of any of the fund-
types. Financial institution deposits, short-term investment pools and money market mutual
funds will provide daily liquidity and may be utilized as a competitive yield alternative to fixed
maturity investments.

Marketability - Securities with active and efficient secondary markets are necessary in the event
of an unanticipated cash flow requirement.

Diversification - Investment maturities should be staggered throughout the budget cycle to
provide cash flow based on the anticipated operating needs of Bedford. Diversifying the
appropriate maturity structure up to the three-year maximum will reduce interest rate risk.

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

2. 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.

City of Bedford, TX | Adopted Budget FY 2025-2026 Page 606