Agenda of Investment Committee meeting

Investment Committee meeting Minutes

22 February 2023

DRAFT

MINUTES OF Carterton District Council
Investment Committee meeting
HELD AT THE Carterton Events Centre, 50 Holloway St, Carterton
ON Wednesday, 22 February 2023 AT 3:00 pm

PRESENT: Deputy Mayor Dale Williams (Interim Chair), Mayor Ron Mark, Cr Lou Newman, Cr Steve Laurence

IN ATTENDANCE: Council staff

Geoff Hamilton (Chief Executive), Kelly Vatselias (Corporate Services Manager), Elisa Brown (Communications and Engagement Manager), Solitaire Robertson (Planning & Regulatory Services Manager), Robyn Blue (Democratic Services Officer)

Other

Peter Verhaart (Eriksens Global)

1 Karakia Timatanga

The meeting opened with a karakia by Deputy Mayor Dale Williams.

2 Apologies

There were no apologies received.

3 Conflicts of Interests Declaration

There were no conflicts of interest declared.

4 Public Forum

There was no public forum.

5 Reports

5.1 Investment Update Report

1. Purpose

The purpose of the report is to provide the Committee with an update on Council’s investments.

NOTED

· In 2022 the previous Council made a commitment to invest $5M. $3M is invested at the current time.

MOVED

That the Committee:

1. Receives the report.

2. Agrees to consider up to $2m of further investment in managed funds at the May Investment Committee meeting.

Deputy Mayor D Williams / Cr L Newman

CARRIED

6 Karakia WhakamUtunga

The meeting closed with a karakia by Deputy Mayor Dale Williams.

The Meeting closed at 3.35pm

Minutes confirmed: ……………………………………

Date: ...................................................

Investment Committee meeting Agenda

24 May 2023

6 Reports

6.1 Investment Update Report

1. Purpose

The purpose of the report is to provide the Committee with an update on Council’s investments.

2. Significance

The matters for decision in this report are not considered to be of significance under the Significance and Engagement Policy.

3. Background

In 2022 the Council made to decision to invest in managed funds and set up an Investment Committee to monitor Council’s investments.

The use of managed funds has been considered as a way to maximise returns, and grow the investment, while also being appropriately conservative with ratepayer funds. The Treasury Management Policy, adopted by the Policy and Strategy Committee on 1 June 2022 allows for Council to invest in externally managed funds.

The strategy to create a long-term investment fund was incorporated into the 2022/23 Annual Plan - the driver being that investment funds returns would increase operating revenue earned and lessen the requirement to fund expenditure via rates increases.

A Statement of Investment Policy and Objectives (SIPO) was adopted by Council in September 2022. The SIPO is the policy document that sets out the investment governance and management framework, risk profile, investment philosophy, strategies and expected objectives of an investment fund or portfolios.

Council has appointed Eriksens Global, Actuaries and Investment Strategists as the Investment Advisor to the Committee. Eriksens Global provides independent, expert advice specifically around investment strategy, management and fund selection. They are currently involved with several councils around New Zealand. Eriksens Global do not have investment products themselves - unlike Milford, Fisher Funds, AMP etc. – they just provide investment advice.

An initial $3m was invested in managed funds, with a further $2m approved for investment before the end of the current financial year.

CDC’s investment position and management are reported at each Investment Committee meeting.

This report sets out the investment position as at 31 March 2023 advising the Committee of the position of investments, their performance over the period, and considers the plan going forward.

4. CURRENT Investment POSITION

The council’s investment position (at end of March 2023) is:

On Call and up to 30 days	$365k
31 – 90 days	$11m
181 Days	$3m
Managed funds	$3m
Borrower notes	$367k
TOTAL	$18m

5. Investments

Investments held at 31 March 2023 amounted to $18 million, including $3 million in managed funds. The balance is held within term deposits or at-call deposits and borrower notes.

5.1 Bank investments

Investments are held across three banks, BNZ, ANZ and Westpac. Call accounts reflect our trading activity while cash and term deposits reflect operational or special reserve investments; the latter are funds set aside for specific purposes, such as infrastructure contributions. We also have Borrower notes in our investment schedule. These are a percentage of the bonds (loans) we have taken out with LGFA and are due when the bonds mature. They are gathering a small amount of interest that is payable on maturity.

The average interest rate on term investments is currently approximately 3.6%.

5.2 Managed funds

The $3m invested in managed funds was split evenly between:

(a) Castle Point Five Oceans Income Fund

(b) Harbour Income Fund

At 31 March 2023 the current position of these investments is shown in the investment schedule (Attachment 1).

The 31 March 2023 report issued by Eriksen’s Global (Attachment 2) shows the performance of the funds since investment (October/November 2022).

These investments are intended to be held for a long period of time, and within that time the values will fluctuate. It is still too early to form a view on fund performance given the short time of investment to date.

6. future planning

The table below shows our current cash (excluding managed funds), the amount we are expecting to use to fund our capital projects from reserves in the second half of the financial year, and the funded depreciation we expect to receive in the second half of this year (used to fund the capital programme). This gives a high-level view of where we expect to see cash balances at year end. Movements from operating expenditure and operating revenue have not been included, as these are expected to largely net off against each other. Council has indicated a preference not to invest restricted reserves in managed funds, which is why these amounts have been removed from the possible funds available.

Council had approved a further investment in managed funds of $2m before year end. It is recommended by Officers that we proceed with this investment. Council has sufficient funds to invest, with remaining cash reserves of $4m and we will be able to remain within liquidity limits. Eriksens Global has provided us with a recommendation for how the $2m could be invested (Attachment 3).

7. NEXT STEPS

Staff will continue to monitor and report on investment position to the Investment Committee.

Staff will continue work on cash-flow forecasting, including the remaining capital programme and cash available for investment.

As Council has already previously approved the further $2m investment via resolution, we do not need to go back to Council for approval. However, we have requested the Committee endorse the decision to invest the $2m at this time, as well as the allocation to the multi-fund assets as recommended by Eriksens Global.

8. CONSIDERATIONS

8.1 Climate change

There are no specific climate change considerations.

8.2 Tāngata whenua

There are no specific tāngata whenua considerations.

8.3 Financial impact

There are no financial impacts resulting from the decisions in this report, other than those already outlined above.

8.4 Community Engagement requirements

There are no community engagement requirements.

8.5 Risks

Key risks relate to investment management areas outlined above.

9. Recommendation

That the Committee:

1. Receives the report.

2. Notes the resolution of Council on 14 September 2022 that a further $2m will be invested in long-term investment funds by 30 June 2023.

3. Endorses the decision to invest a further $2m in long-term investment funds, with the allocation as follows, as recommended by Eriksens Global:

(a) Castle Point 5 Oceans: $325,000

(b) Harbour Income: $325,000

File Number: 336420

Author: Kyra Low, Finance Team Leader

Attachments: 1. Investment schedule ⇩

2. Eriksens Global update 31 March 2023 ⇩

3. Eriksen's Global investment recommendation ⇩


AGENDA Investment Committee meeting
Date:	Wednesday, 24 May 2023
Time:	11:30 am
Location:	Carterton Events Centre 50 Holloway St Carterton
Deputy Mayor D Williams Mayor R Mark	Cr L Newman Cr S Laurence