An Authorized Investment is an investment that is approved by the City of McKinney. These investments are permitted in the City’s investment policy. Investment risks are managed by diversifying assets to limit issuer default and market price change risks. Diversification limits are shown in the Authorized Investment section. For more information, see the guide for more information. Investing in these types of assets may be beneficial for your retirement portfolio. Listed below are examples of some of the types of investments authorized by the City of McKinney.
The investment committee is comprised of the City Manager, Chief Financial Officer, Director of Finance, Investment & Treasury Manager, and at least two other members appointed by the City Manager. The Investment Committee meets quarterly, and may call for special meetings if necessary. Members of the Investment Committee discuss performance reports, market trends, and potential risks to the City’s funds. The committee also approves and reviews the list of authorized investment brokers, which is updated annually. Trustees are required to adhere to the list of authorized investments.
The Chief Financial Officer has overall management responsibility for the investment program. He shall implement written procedures to operate the investment program in accordance with the investment policy. The procedures must identify the persons responsible for each investment transaction. A member of the Investment Committee must meet specific qualifications to perform his or her duties. He or she should be bonded to avoid the risk of a lawsuit or liability for investment decisions made. In addition, the investment committee should establish its own rules and procedures to oversee the program.
Another option is an interest-only investment. These types of investments are based on interest payments from the bond. Once the principal is repaid, interest payments cease. This makes the value of the security zero. These types of investments are often associated with mortgage-backed securities. The difference between these types of investments is substantial. Separate duties will prevent fraud or collusion. If an Authorized Investment firm has a broker-dealer on staff, then it is a broker-dealer.
Trusts often include an Authorized Investment List. The purpose of the list is to provide guidance on what types of investments the trust may not be allowed to make. This list ensures that investment outcomes align with the grantor’s wishes. For instance, a trust may be a good example of a “strictly controlled” fund. The investment guidelines will help the trustee invest prudently. If a trust is small, the trustees should invest in index funds, mutual funds, and other pooled structures. The pooled investments will provide exposure to a broad basket of assets without excessive risk.
The benchmark program also includes Benchmark Bills, a short-term debt securities issuance program. These issues are brought to the market via a Dutch auction. The FNMA also conducts weekly auctions for Benchmark Bill maturities and accepts competitive bids through a web-based auction system. There are also various discount note maturities and daily rates. If you choose to work with an Authorized Investment Program, make sure that you consult with your investment adviser about its investment guidelines to avoid problems and minimize risk.