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Policy 0037
Investment Policy
Department:
Corporate and Legislative Services
Division:
Financial Services Division
Section/Function:
N/A
Approval Level:
Council
Effective Date:
2021-05-25
Revision #:
1
1.0
Purpose
1.1.
The Purpose of this Policy is to provide guidance for the management of the City of
Peterborough's investment funds and to formalize the objectives, restrictions, limits and
composition of the investment portfolio.
2.0
Application
2.1.
This Policy applies to all investments made on behalf of the City, with the exception of
the Legacy Fund, and includes operating funds, reserve and reserve funds, obligatory
reserve funds, capital funds and trust funds.
3.0
Definitions/Acronyms
Adequate Credit Quality - The capacity for the payment of financial obligations is considered
acceptable. May be vulnerable to future events.
Credit Risk - Involves limiting investments to safer types of securities based on credit quality
ratings as well as diversifying the investment portfolio to minimize potential losses on individual
securities. Limiting this risk also entails setting dollar limits on the exposure to the type of
issuer.
Good Credit Quality - The capacity for the payment of financial obligations is substantial.
May be vulnerable to future events, but qualifying negative factors are considered
manageable.
Interest Rate Risk - The risk that the interest rate will fluctuate and cause significant swings
in the level of income derived from the investment portfolio. Interest rate risk is mitigated by
investing in securities with varying time to maturity to limit exposure to interest rate volatility.
Legacy Fund - An endowment style investment strategy designed to preserve the initial
Capital investment while providing a stable income return for the investor. Capital, in the
Policy 0037
Investment Policy
Page 2 of 4
Legacy Fund Policy, refers to the net proceeds from the sale of assets of Peterborough
Distribution Inc. to Hydro One.
Liquidity - The investment portfolio is structured to meet cash flow requirements for regular
disbursement and other scheduled obligations. To account for unpredictable cash flow
demands, the portfolio will consist of an adequate level of securities that can be easily
liquidated. The City's investments shall be diversified by holding securities of various terms to
maturity and various types of investments.
Long Term - A debt or equity security that is expected to be held for more than 364 days after
purchase.
Preserve Capital - Refers to the concept of ensuring the principal value of investments is
maintained despite fluctuations in various market conditions.
Rate of Return - The gain or loss of an investment over a specified period of time expressed
as a percentage of the investment's cost.
Short Term Investment - A debt or equity security that is expected to be sold or converted
into cash in no longer than 364 days after purchase.
Superior Credit Quality - The capacity for the payment of financial obligations is
exceptionally high and is unlikely to be adversely affected by future events.
Treasurer - An individual appointed by Council in accordance with the Municipal Act, 2001
who is responsible for handling all of the financial affairs of the City on behalf of and in the
manner directed by the Council of the City.
4.0
Policy Statement(s)
4.1.
This Policy is designed to provide an effective framework for investment of the surplus
cash resources of the City of Peterborough bound by statutory legislation.
1.
The City will invest funds according to the applicable sections of the Municipal
Act, 2001 such as Section 418, and the Ontario Regulation 4387/97.
2.
The Treasurer will invest surplus cash of the City in a prudent manner while striving
to:
1. Ensure an adequate level of Liquidity;
2. Minimize the degree or risk and Preserve Capital; and
3. Maximize the Rate of Return.
Policy 0037
Investment Policy
Page 3 of 4
3.
The composition of the City's investment portfolio will be subject to the limits
detailed in Chart 1. (Attachment A)
4.
The Treasurer has the delegated authority to use the services of an agent for the
management of surplus cash.
5.0
Appendix, Related Documents & Links
Note: All references refer to the current version, as may be amended from time to time.
5.1.
Pertinent Resources:
- Municipal Act, 2001
https://www.ontario.ca/laws/statute/01m25
- Ontario Regulation 438/97
https://www.ontario.ca/laws/regulation/970438
- Bank Act, 1991 (Canada)
https://laws-lois.justice.gc.ca/ENG/ACTS/B-1.01/index.html
- Trust and Loan Companies Act, 1991 (Canada)
https://laws-lois.justice.gc.ca/eng/acts/T-19.8/index.html
- Credit Union and Caisses Populaires Act, 1994
https://www.ontario.ca/laws/statute/94c11
5.2.
Related Policies:
- Policy 0052, Legacy Fund Investment Policy
https://www.peterborough.ca/en/city-hall/resources/Documents/Plans-and-
Policies/Policy-Accessible-Format/Legacy-Fund-Investment-Policy-Revision-1_.pdf
5.3.
Related Procedures:
- N/A
5.4.
Related Forms:
- N/A
5.5.
Miscellaneous:
- N/A
Policy 0037
Investment Policy
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6.0
Amendments/Reviews
Date
(yyyy-mm-dd)
Section #
Amended
Comments
2016-10-24
Investment Policy approved by Council. Former Investment and
Banking Services Policy rescinded by Council.
2021-05-25
Application &
Definitions
Revision #1 - Changes made to Investment Policy through
Report CLSFS21-020 - Legacy Fund Investment Policy to
exclude the Legacy Fund from the Investment Policy.
Next Review Date:
2024-01-01