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San Clemente advisers recommend gradual shift toward credit in Chandler-managed allocation; committee preserves current structure
Summary
Committee members discussed increasing credit exposure within Chandler's sleeve (ABS, medium-term corporates) but ultimately voted to maintain the current city-managed/Chandler split while allowing Chandler to use maturities to increase credit exposure incrementally, subject to policy limits and legal checks.
The Investment Advisory Committee reviewed a proposal to increase the portion of the Chandler-managed sleeve invested in credit assets (asset-backed securities, corporate medium-term notes) during its April 27 meeting.
The chair reviewed current policy limits (ABS limit 10%; medium-term note allocation about 20% with current holdings lower than limits) and said the committee is underallocated now relative to limits. Chandler's Jason cautioned that any move increases credit risk and described risk-mitigation approaches including layered liquidity and maintaining a government-security bias in the city's internally managed portfolio.
Jason said the plan would be to increase credit exposure gradually "as maturities occur," rather than moving large sums immediately. He emphasized safety and liquidity as the first priorities and noted the committee's benchmark would remain short (about two-year average maturity) to limit credit-event risk.
After discussion, the committee approved a motion to "maintain the current structure for city-managed investments," with the understanding that Chandler would tweak allocations within its sleeve as maturities are realized. The chair clarified the vote preserved the status quo across the city-managed/Chandler split while allowing opportunistic reallocation inside Chandler's mandate.
Staff will return with a more detailed implementation plan and modelling before any substantial reallocation occurs.
