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Asset Management Group. Portfolio Management. P R E S E N T E D B Y M. Corinne Larson, CTP Vice President (914) 765-3505 [email protected] Investing in Today’s Market. Develop a Plan: Investment Policy Cash Flow Forecasting Investment Strategies.

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Asset Management Group

Portfolio Management

P R E S E N T E D B Y

M. Corinne Larson, CTP

Vice President

(914) 765-3505

[email protected]


Investing in today s market
Investing in Today’s Market

  • Develop a Plan:

  • Investment Policy

  • Cash Flow Forecasting

  • Investment Strategies

  • Execute the Plan:

  • Investment Instruments

  • Investment Options

  • Spread Analysis

  • Reevaluate the Plan:

  • Benchmarks

  • Portfolio Performance

  • Portfolio Rebalance


Importance of a benchmark
Importance of a Benchmark

  • Control risk in portfolio

  • Target expected returns

  • Establish accountability

  • Promote communication


Characteristics of benchmarks
Characteristics of Benchmarks

  • Faithful to investment style and discipline it represents

  • Closely mirror the portfolio

    • Types of investments

    • Maturity limits

    • Active or passive management

  • Verifiable

    • Published

    • Easily calculated


Choosing a benchmark
Choosing a Benchmark

  • Choose a security type

    • Come from appropriate industry or sector

    • Have a similar weighted average maturity or duration

  • Calculate one-month, six-month, and 12-month averages


Choosing a benchmark1
Choosing a Benchmark

  • Choose an index

    • Investable

    • Measurable

    • Repeatable

    • Consistent with portfolio guidelines


Common benchmarks
Common Benchmarks

  • Standard & Poor’s LGIP Index

  • Public Investor 10-bill Performance Index

  • Constant Maturity Treasury Rates

    • 3- and 6-months

    • 1-, 2- and 5-years



Common benchmarks1
Common Benchmarks

  • Merrill Lynch U.S. Treasury Indices

  • Salomon U.S. Treasury Benchmark Indices

  • Lehman Brothers Government Bond Indices

  • Merrill Lynch U.S. Corporates A-AAA


Where to find benchmarks
Where to Find Benchmarks

  • Wall Street Journal

  • Barron’s

  • Bloomberg

  • Internet

  • GFOA’s Public Investor newsletter


Portfolio performance
Portfolio Performance

  • Compare returns

  • Evaluate risk incurred to achieve returns

  • Determine if returns meet expectations

  • Reevaluate benchmark at least annually or when investment strategy changes



Portfolio rebalancing
Portfolio Rebalancing

  • Evaluate

    • Compliance issues

    • Credit risk

    • Liquidity needs

    • Diversification

    • Market conditions

    • Interest rate risk

    • Investment strategies


Portfolio rebalancing1
Portfolio Rebalancing

  • Diversify

    • Market sectors or issuers

    • Rate

    • Maturity

  • Match asset allocation goals and tolerance for risk

  • Adjust WAM for market conditions

  • Swap out of underperforming securities


Putting it all together
Putting It All Together

  • Establish the framework for investing

  • Understand investment alternatives

  • Develop cash flow forecasts

  • Develop investment strategies

  • Report investment results


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