HomeMy WebLinkAboutResolution No. 2020-06CITY OF KENAI
RESOLUTION NO. 2020-06
Suggested by: Administration
A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, DESIGNATING THE
INVESTMENT AND ALLOCATION PLAN FOR THE CITY'S PERMANENT FUNDS AND
ESTABLISHING APPROPRIATE BENCHMARKS TO MEASURE PERFORMANCE FOR
CALENDAR YEAR 2020.
WHEREAS, pursuant to KMC 7.30.020 (a) (2) the Council of the City of Kenai shall annually
approve an Asset Allocation Plan for investment of the City's Permanent Funds; and,
WHEREAS, KMC 7.30.020 (b) permits investment of the Permanent Funds in various asset
classes and the Council believes that establishing asset allocation criteria for these various asset
classes is in the best interest of the City of Kenai; and,
WHEREAS, the annually approved Asset Allocation Plan will provide benchmarks to measure
investment performance.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA,
Section 1: That the Council adopts the Asset Allocation Plan for calendar year 2020 as
follows:
The Asset Allocation Plan and Target Weightings with range restrictions are:
ASSET CLASS TARGET % WEIGHTING RANGE %
Cash
5
0-10
Fixed Income
40
35-65
Large -Cap Domestic Equity
20
15-25
International Equity
10
5-15
Mid -Cap Equities
10
5-15
Small -Cap Equities
5
0-10
International Emerging Markets
5
0-10
Real-estate equities
2
0-5
Infrastructure equities
3
0-6
Section 2: The performance of the Fund and investment managers will be measured as
follows:
Performance measurement of the Fixed Income allocation will be measured against the Target
weighting, using the Bloomberg Barclays U.S. Aggregate Bond Index for the benchmark.
Performance measurement of the Large -Cap Domestic Equity allocation will be measured against
the Target weighting, using the Standard & Poor's 500 Index for the benchmark.
Resolution No. 2020-06
Page 2 of 2
Performance measurement of the International Equity allocation will be measured against the
Target weighting, using the Morgan Stanley Capital International Europe, Australasia and Far
East (MSCI EAFE) index for the benchmark.
Performance measurement of the Mid -Cap Equity allocation will be measured against the Target
weighting, using the Standard & Poor's 400 Mid -Cap Index as the benchmark.
Performance measurement of the Small -Cap Equity allocation will be measured against the
Target weighting, using the Standard & Poor's 600 Small -Cap Index as the benchmark.
Performance measurement of the International Emerging Markets allocation will be measured
against the Target weighting, using the Morgan Stanley Capital International Emerging Markets
index as the benchmark.
Performance measurement of the Real -Estate Equities allocation will be measured against the
target weighting, using the Standard & Poor's US REIT Index as the benchmark.
Performance measurement of the Infrastructure Equities allocation will be measured against the
target weighting, using the STOXX Global Broad Infrastructure Index as the benchmark.
Performance measurement of the Cash allocation will be measured against the Target weighting,
using the Citi Group 90 Day T -Bill Index as the benchmark.
Section 3. That this resolution takes effect immediately upon passage.
PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 5'" day of February 2020
_.--j%,N GABRIEL SR., MAYOR
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Approved by Finance: UNDVD
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KENAI, ALASKA
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MEMORANDUM
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210 Fidalgo Ave, Kenai, Alaska 99611-7794
Telephone: (907) 283-7535 1 Fax: (907) 283-3014
www.kenai.city
TO: Mayor Brian Gabriel and Kenai City Council
THROUGH: Paul Ostrander, City Manager
FROM: Terry Eubank, Finance Director
DATE: January 22, 2020
SUBJECT: Resolution No. 2020-06 — The Investment Allocations Of And
Establishing Appropriate Benchmarks To Measure Performance Of The
City's Permanent Funds For Calendar Year 2020.
Pursuant to KMC 7.30.020 the Council shall annually designate by resolution, the authorized
investments and allocation plan for the City's Permanent Funds. Resolution No. 2020-06
establishes the allocation plan and evaluation benchmarks to be used for calendar year 2020.
This year's allocation plan is the same and there is one change in the evaluation benchmarks.
Added for evaluating the performance of the portfolios cash component is the Citi Group 90 Day
T-bill Index. This benchmark was inadvertently omitted from the 2019 Resolution but has been
utilized when benchmarking the portfolios performance. This addition could be considered a
house keeping change.
The portfolio is projected to return five point nine percent (5.9%) annually for the next ten years.
Risk of the portfolio is measured in standard deviation from the expected rate of return. One
standard deviation is equal to about sixty-eight percent (68%) of all possible outcomes and two
standard deviations is equal to about ninety-five percent (95%) of all possible outcomes. Sixty -
Eight percent (68%) (one standard deviation) of the time, the portfolio is expected to annually
return between negative three percent (-3.0%) and fifteen point six percent (15.6%), with an
average annual return of six point three percent (6.3%). Ninety-five percent (95%) (two standard
deviations) of the time, the portfolio is expected to annually return between negative twelve point
three percent (-12.3%) and twenty-four point nine percent (24.9%).