Page 415 - FY 2026-2027 Adopted Budget Book

II. General Objectives.

The primary objectives, in priority order, of investment activities shall be safety, liquidity, and
yield:

1. Safety. Safety of principal is the foremost objective of the investment program.
Investments shall be undertaken in a manner that seeks to ensure the preservation of
capital in the overall portfolio. The objective will be to mitigate credit risk and interest
rate risk.
a. Credit Risk. Bedford will minimize credit risk, the risk of loss due to the failure
of the investment issuer or backer, by:

1) Limiting investments to the safest types.

2) Pre -qualifying the financial institutions, broker/dealers, intermediaries, and
advisors with whom Bedford will do business.

3) Diversifying the investment portfolio so that potential losses on individual
investments will be minimized.

4) Establishment of procedures to monitor rating changes of investments
and the liquidation of such investments as required by the PFIA.

b. Interest Rate Risk. Bedford will minimize the risk that the market value of
securities in the portfolio will fall due to changes in general interest rates by:

1) Structuring the investment portfolio so that securities mature to meet
cash requirements for ongoing operations, thereby avoiding the need to
sell securities on the open market prior to maturity.

2) Investing operating funds primarily in shorter -term securities, financial
institution deposits, money market mutual funds, or local government
investment pools.

2. Liquidity. The investment portfolio shall remain sufficiently liquid to meet all operating
requirements that may be reasonably anticipated. This is accomplished by structuring the
portfolio so that investments mature concurrent with cash needs to meet anticipated
demands (static liquidity). Furthermore, since all possible cash demands cannot be
anticipated, the portfolio should consist largely of investments with active secondary or
resale ma rkets (dynamic liquidity). All or a portion of the portfolio also may be placed in
financial institution deposits, money market mutual funds, or local government
investment pools which offer same -day liquidity for short -term funds.

3. Yield. The investment portfolio shall be designed with the objective of attaining a
market rate of return throughout budgetary and economic cycles, taking into account the
investment risk constraints and liquidity needs. Return on investment is of secondary
importance compared to safety and liquidity. Investments shall not be liquidated prior to
maturity with the following exceptions:

a. An investment with declining credit may be sold early to minimize loss of principal.
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