Legality of Investments

All investment activities are governed by the Ontario Municipal Act, 2001 as amended. Any investments made by the City must be those deemed eligible under Ontario Regulation 438/97 or as authorized by subsequent provincial regulations unless limited further by the City’s investment policy.

Preservation of Capital

All investment activities will minimize the risk of incurring a capital loss and of preserving the value of the invested principal. This is accomplished by investing in properly rated financial instruments as per the legislation, by limiting the types of investments to a maximum recommended percentage of the total portfolio, and by limiting the amount invested within individual institutions to a maximum percentage of the total portfolio as per the City’s investment policy.

Maintenance of Liquidity

The term liquidity implies a high degree of marketability and a high level of price stability. The portfolio as a whole is structured to maintain a proportionate ratio of short, medium and longer-term maturities to meet the funding requirements of the Corporation. To date, the general investment portfolio has remained sufficiently liquid to meet all operating or cash flow requirements so as not to require temporary borrowings. This has been done, where possible, by structuring the portfolio such that securities mature concurrent with anticipated cash demands.

Competitive Rates of Return

Investment yields can only be sought within the boundaries set by the foregoing objectives. Higher yields are best obtained by taking advantage of the interest rate curve of the capital market, which normally yields higher rates of return for longer-term investments. Yields will also fluctuate by institution as per individual credit ratings (greater risk confirmed by a lower credit rating) and by the type of capital instrument invested in. For example an instrument of a small trust company would normally have a slightly higher yield than a major bank, and capital instruments that are non-callable will have a lower yield than instruments which are callable.

Scope of Portfolio

The investment portfolio could be comprised of:

I. Excess Operating and Capital cash flow balances II. Reserve Accounts and Reserve Funds III. Trust Funds IV. Sinking Funds

The scope of the investment policy applies to all investments made by the City on its own behalf and on behalf of and its agencies, boards, commissions, and wholly owned subsidiaries including any new funds created by the City unless specifically directed otherwise by City Council.