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Simi Valley council adopts updated investment policy; staff to study adding state-authorized fixed-income options
Summary
The Simi Valley City Council unanimously adopted a revised 2025 statement of investment policy after a presentation by Insight Investments outlining portfolio performance and candidate asset classes the city could consider.
The Simi Valley City Council on Monday adopted an updated 2025 statement of investment policy after a detailed briefing from the city's financial advisers, Insight Investments. The unanimous council vote approved language that preserves safety and liquidity as the city's primary investment goals while allowing staff flexibility to manage returns.
Insight Investments' senior portfolio manager, Mary Donovan, told the council that "the City of Simi Valley's investment policy not only complies with California state statute, but provides the flexibility required to address the city's stated investment objectives of safety, liquidity, and investment return." Her team reviewed the city's fixed-income portfolio performance and recommended a small number of additional investment types the city could consider.
At the presentation, Insight identified three investment categories permitted under California law but not currently authorized in Simi Valley's policy: asset-backed securities (ABS), agency mortgage-backed securities (MBS), and corporate bonds offered under Rule 144A. Insight noted the potential for incremental yield from some of those instruments but warned of liquidity and prepayment/extension risks that would require governance and oversight.
Deputy Administrative Services Director Marvin Lopez recommended adoption of the 2025 policy as presented and said staff and the adviser would return with more-detailed options if the council wished to pursue them. Councilmember Ayala urged staff to work with Insight to evaluate the three additional asset classes and bring back practical recommendations.
Councilmember Rhodes said he supported exploring ways to increase returns for funds not needed for near-term liquidity, while Councilmember Litster emphasized the need to maintain operating liquidity for the city's budget and capital projects.
The motion to approve the 2025 statement of investment policy passed unanimously. Council also directed staff to return with analyses and recommendations regarding the feasibility and risks of adding the three state-authorized asset categories and of changing the portfolio's benchmark duration to capture incremental return.
Key points - City adopted the 2025 statement of investment policy reaffirming safety, liquidity and yield objectives. - Insight Investments recommended considering ABS, agency MBS and 144A corporate bonds, but cautioned about liquidity and prepayment risks. - Council directed staff to return with options and risk analyses for those additions and any benchmark-duration changes.
The adopted policy will guide staff and the city's advisers in managing the general fund and other city funds consistent with California law and the council's risk tolerance.
