Title
Resolution affirming the County Investment Policy.
Body
Recommended Action: Adopt the Resolution to affirm the County Investment Policy.
The County Investment Policy was originally adopted in 2000 and has been modified several times, most recently in 2017.There are three proposed updates detailed below. The policy has been approved by the State's Municipal Investment Board, which gives the County access to investment vehicles not authorized by state law for local governments whose investment policies are not state-approved. Sedgwick County is one of nine governments throughout Kansas that have state-approved investment policies.
One provision of the investment policy requires an annual review by staff and modification as may be necessitated by changing conditions. The review has been performed, and three changes, as mentioned above, to existing policy are necessary or recommended.
RECOMMENDED CHANGE 1
On page 9 of the attached policy; the chart of Investment Type, Under Agency Securities, the percentage for callable obligations changed from 40.0 percent to 60.0 percent. Over the last year as the rates have been rising, the County has been purchasing step-up bonds. A step-up bond is a bond that pays an initial coupon rate for the first period, and then a higher coupon rate for the following periods. These bonds are often purchased by individuals or portfolio managers who wish to hold fixed-income securities with similar features to Treasury Inflation-Protected Securities (TIPS) but with a higher coupon. Because the coupon payment increases over the life of the bond, a step-up bond lets investors take advantage of the stability of bond payments while benefiting from interest rate increases. Since the County has been purchasing these step-up bonds, they are considered callable obligations. In order to continue to take advantage of these types of bonds, the County needs to increase the policy limit so they can be included in the County's portfolio....
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