2011 budget summary - St. Louis County

ST. LOUIS COUNTY, MISSOURIINVESTMENT AND PORTFOLIO POLICYReviewed and Approved: May 10, 2010SCOPEThis investment policy applies to activities of the St. Louis County Department of Administration. Thispolicy is written in regard to investing the pooled financial assets of all St. Louis County funds and fundsin the custody of St. Louis County. This policy also includes the investment of general obligation bondproceeds when invested separately from the pool. This policy excludes investments of the pension fundsand funds held in the custody of the St. Louis County Circuit Clerk.All funds under management of the St. Louis County Treasurer (except for general obligation bondproceeds) are consolidated and invested on a pooled basis in order to maximize investment earnings.Investment income will be allocated to the various funds based on the daily accumulated average balanceof the participating funds.OBJECTIVESThe primary objectives, in priority order, of St. Louis County's investment activities shall be:Safety:Safety of principal is the foremost objective of the investment program.Investments of St. Louis County shall be undertaken in a manner that seeks toensure the preservation of principal in the overall portfolio.a. Credit RiskSt. Louis County will minimize credit risk, the risk of loss due tothe failure of the security issuer or backer, by:‣ Pre-qualifying the financial institutions, securities dealers,intermediaries, and advisors with which St. Louis County will dobusiness.‣ Diversifying the portfolio so that potential losses on individualsecurities will be minimized.‣ Settling all purchase/sale transactions delivery-vs-payment.b. Interest Rate RiskSt. Louis County will minimize the risk that the market value ofsecurities in the portfolio will fall due to changes in general interest ratesby:‣ Structuring the investment portfolio so that securities mature to meetcash requirements for ongoing operations, thereby avoiding the needto sell securities on the open market prior to maturity.‣ Maintaining a sufficient balance in liquid funds to adequately coverforecasted cash requirements.- 297 -