Page 4 - City of Moreno Valley Invstment and Cash Management Program

Why Does The City
HAVE INVESTMENTS?

In general the city uses revenues received during the current year to fund the operations of
the city during that year. The City records these revenues into funds; such as, the general
fund, capital project funds, or reserve funds. Certain funds are used to hold and accumulate
resources that will be spent in the future to complete a capital project or purchase equipment
or other long-term type asset. These funds are waiting to be disbursed at a future date and can
be described as “Idle”. Instead of letting these funds sit idle, the City invests into a diversified
portfolio in a manner that preserves capital and generates additional revenues that can be
utilized to support City services.

CITY PORTFOLIO OBJECTIVES

The City manages its portfolio with the focus on three objectives:

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Safety Liquidity Yield
Preserve capital in Provide adequate liquidity Achieve a reasonable
the overall portfolio to meet cash flow needs rate of return

Safety

Safety is always the primary objective followed closely by Liquidity. All investments carry some degree
of risk; and in general, more risk is required the higher the desired return on investment. The California
Government Code and the City’s Investment Policy deal specifically with the Safety concept in their
sections that limit the types of allowable investments, which will be discussed in the next section.

Liquidity

Liquidity measures the ease of which a particular asset can be converted into cash. A certain amount
of liquidity is important in an investment portfolio as it allows the City to quickly meet changing financial
obligations. The City maintains a Liquidity or Core Portfolio that has been specifically designed to meet
our day-to-day obligations.

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