HomeMy WebLinkAboutItem 2n: Contract with Cutwater Asset Management for Investment Mgmt. ServicesWON NO
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DATE: August 7, 2012
STAFF REPORT
Administrative Services Department
TO: Mayor and City Council
FROM: Hue C. Quach, Administrative Services Director
Shannon Huang, Financial Services Manager /City Tre surer
SUBJECT: AUTHORIZE THE CITY MANAGER TO EXECUTE A ONE YEAR
CONTRACT WITH CUTWATER ASSET MANAGEMENT FOR
INVESTMENT MANAGEMENT SERVICES IN THE AMOUNT NOT TO
EXCEED $41,000
Recommendation: Approve
SUMMARY
Cutwater Asset Management Group has managed a portion of the City's investment
portfolio since 2007. It has been determined that Cutwater has met the City's
expectations over the past year. It is recommended that the City continue using
Cutwater's services for the period of July 2012 to June 2013.
DISCUSSION
The City entered into an agreement with the Cutwater Asset Management to provide
investment advisory services in April 2007. The purpose of this agreement was to utilize
Cutwater's investment expertise to enhance the overall rate of return on the City's
portfolio. Cutwater was selected from among five proposals.
Cutwater manages up to $50.0 million of the City's investment portfolio. The basic
concept was to have Cutwater oversee assets available for longer term investment,
while City staff retains control over assets requiring greater liquidity.
The agreement with Cutwater is subject to review annually. Staff and at least one
Council Member conduct an annual review of the firm's performance. After each review,
a formal recommendation is made to the City Council for direction either to continue
services with Cutwater or to consider other alternatives. The City has the ability to
terminate the agreement for any reason by giving a written notice to Cutwater no less
than thirty (30) days prior to the requested termination date.
Contract Renewal For Investment
Management Services
August 7, 2012
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On July 25, 2012, Mayor Robert Harbicht, City Manager Dominic Lazzaretto,
Administrative Services Director Hue Quach, and Financial Services Manager /City
Treasurer Shannon Huang met with Cutwater representatives to review the past year's
performance.
As of the month ended June 2012, the City's investment portfolio totaled $102 million,
with an overall rate of return of 0.86 %. In comparison, the Two -Year and Five -Year
Treasury Note were earning 0.29% and 0.71%, respectively, at that point in time.
Cutwater managed assets had a total rate of return equal to 0.87% after the
management fees. Although the City's investment earnings have been declining,
largely due to an overall low interest market, the investment portfolio still has
outperformed its benchmark, which is a twelve month moving average of Two -Year
Treasury Yield.
Staff has not encountered any problems during the year working with Cutwater and
believes that the firm has adhered to all the requirements of its contract with the City.
FISCAL IMPACT
Cutwater charges fees for services based on the amount of assets under management.
It is estimated that the annual cost will be about $41,000, and funding for their service
has been included in the adopted budget.
RECOMMENDATION
It is recommended that the City Council authorize City Manager to execute a one year
contract with Cutwater Asset Management for investment management services in the
amount not to exceed $41,000.
APPROVED:
o o
City Manager
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