Tampa Bay Water periodically reviews its investment policy in an effort to improve the management of idle funds and better reflect current market conditions. The last time the investment policy was reviewed was three years ago.
The market has changed significantly since then. Previously, Tampa Bay Water concentrated its investments in very conservative funds to provide safer havens for its idle funds during a time when interest rates were historically low. Over the past three years, Tampa Bay Water was still able to perform slightly better than the Merrill Lynch 1-3 Year Treasury Note Index benchmark.
At its Aug. 21 meeting, Tampa Bay Water’s board reviewed and approved an updated investment policy that provides guidance to control and mitigate the market risks and continue diversifying the agency’s investment portfolio.
Major changes in the 2017 investment policy call for the agency to increase diversification and modify some maximum issuer limits, control and mitigate exposure to market risk, and maintain necessary cash flow (a minimum of six months’ of budgeted operating expenses) in short-term investments. Additionally, the agency will hold the duration of any portfolio to the approximate duration of its benchmark, Merrill Lynch 1-3 Year U.S. Treasury Note Index.