HomeMy WebLinkAboutResolution No. 2025-08KENAI
CITY OF KENAI
RESOLUTION NO. 2026-08
Sponsored by: Administration
A RESOLUTION DESIGNATING THE INVESTMENT AND ALLOCATION PLAN FOR THE CITY'S
PERMANENT FUNDS AND ESTABLISHING APPROPRIATE BENCHMARKS TO MEASURE
PERFORMANCE FOR CALENDAR YEAR 2025.
WHEREAS, pursuant to KMC 7.30.020 (a) (2) the Council of the City of Kenai annually approves an
Asset Allocation Plan for investment of the City's Permanent Funds; and,
WHEREAS, Kenai Municipal Code 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 provides 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 2025 as follows:
The Asset Allocation Plan and Target Weightings with range restrictions are:
ASSET CLASS
Cash
Fixed Income:
Investment Grade Domestic Bonds
High Yield Domestic Bonds
Domestic Equity:
Large -Cap Domestic Equity
Mid -Cap Equities
Small -Cap Equities
International Emerging Markets
International Equity
Real-estate equities
Infrastructure equities
Alternative Beta
TARGET % WEIGHTING RANGE %
3 0-10
26 16-36
4 0-8
22
12-32
10
0-18
5
0-10
5
0-10
8
4-16
2
0-4
5
0-10
10
0-15
Section 2. The performance of the Fund and investment managers will be measured as follows:
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.
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Resolution No. 2025-08
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Performance measurement of the Investment Grade Domestic Bond allocation will be measured against
the Target weighting, using the Bloomberg Barclays U.S. Aggregate Bond Index for the benchmark.
Performance measurement of the High Yield Domestic Bond allocation will be measured against the
Target weighting, using the Bloomberg Barclays U.S. Corporate High Yield Very Liquid 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.
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 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 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 Alternative Beta allocation will be measured against the target
weighting, using the Wilshire Liquid Alternatives Index as the benchmark.
Section 3. That this Resolution takes effect on immediately upon passage.
PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, THIS 5T" DAY OF FEBRUARY, 2025.
ATTEST:
MM—elle C, City Clerk
Approved by Finance:
Efrian Gabriel Sr.,'Mayor
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k F N A'
City of Kenai 1 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.75351 www.Lenaixity
MEMORANDUM
TO: Mayor Gabriel and Council Members
THROUGH: Terry Eubank, City Manager
FROM: Dave Swarner, Finance Director
DATE: January 29, 2025
SUBJECT: Resolution No. 2025-08 — Designating the Investment Allocations of
and Establishing Appropriate Benchmarks to Measure Performance of
the City's Permanent Funds for Calendar Year 2025.
Pursuant to KMC 7.30.020 the Council annually designates by resolution, the authorized
investments and allocation plan for the City's Permanent Funds. Resolution No. 2025-08
establishes the allocation plan and evaluation benchmarks to be used for calendar year 2025.
There is no recommended change to the asset allocation from 2024. The portfolio is projected to
yield 6.79% on average, a 0.51 % increase from last year. The portfolio is projected to have an
annual risk of 10.45% compared to last year's risk of 10.45%. This represents no change in
portfolio risk or overall risk.
Annual risk is the variation in the expected return of the portfolio at one standard deviation,
approximately 68% of all occurrences. The risk of the portfolio is doubled at two standard
deviation, 95% of all occurrences. For the proposed portfolio which has an expected annual return
of 7.30% and a ten-year expected return of 6.79%, 68% of the time the portfolio should annually
return between (3.04)% and 17.63% and 95% of the time the portfolio should return annually
between (11.72)% and 29.19%
In addition to no change in the portfolio's asset allocation, there is also no change in the portfolio's
benchmarks. Benchmarks are used to evaluate the portfolio's return as compared to the return of
the market. The following is the recommended 2025 asset allocation for your review.
2026
Asset
Allocation
Cash 3%
Fixed Income
Domestic Investment Grade Bonds 26%
High Yield Domestic Bonds 4%
Total Cash and Fixed Income 30%
Domestic Equities
US Large Cap 22%
US Mid Cap 10%
US Small Cap 5%
International Equities 8%
Emerging Market Equities 5%
Total Equities 50%
Alternative Investments
Real Estate
2%
Infrastructure
5%
Alternative Beta
10%
Total Alternative Investments
17%
Total Portfolio 100%
Expected Average Annual Return 7.30%
Expected Risk (one Standard Deviation) 10.45%
Return Range (11.72)% to 29.19%
Long-term Expected Return 6.79%
Your support for adoption of Resolution 2025-08 is respectfully requested.
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