Common Mistakes in Managing your Investment Portfolio MONDAY ■ MAY, 22 2017 2:40-3:55PM Common Mistakes in Managing your Investment Portfolio MODERATOR Damien Grant Vice President, Multi-Bank Securities Scott McIntyre, CFA SPEAKERS Managing Director/Senior Portfolio Manager, FirstSouthwest Asset Management Chris Daniel Chief Investment Officer, City of Albuquerque, NM #GFOA2017

Introductions Conference Session Overview Topic Overview Speakers Chris Daniel, CFA, Chief Investment Officer, City of Albuquerque Scott McIntyre, CFA, Senior Portfolio Manager, FirstSouthwest Asset Management

Appropriateness of Policies & Procedures Need for Dynamic Investment Policy Don’t Regurgitate Statutes & Ordinances Review and Update at Least Annually Make Sure Staff and Others Are Aware of Procedures Developed to Implement Policies Components Follow an Institutional IPS Format (I.E., Purpose, Responsibilities, Objectives & Constraints Clear Statement Of Authorized Investments Reporting Parameters Custody & B/D Conditions Diversification Requirements Hiring Advisors and Broker/Dealers Must Balance Safety, Liquidity, and Return

GFOA Best Practices Development of an Investment Policy Investment Program for Public Funds

Banking & Cash Management Take Time To Sit Down Periodically (At Least Annually) With Fiscal Agent For a Line-by-line Review. Must Also Compare Analysis To RFP Cost Proposal. Understand Various Fee Structures Know for various components including safekeeping/custody; trust; and management Understand value of earnings credit Review Daily Cash Positioning and Balance Minimization

Selection of Brokers & Advisors FINRA Broker Check Now Free Online https://brokercheck.finra.org Importance of Broker Due Diligence AND Maintaining Arm’s Length Relationship Go To Broker With Idea of What You Want/Your Needs Advisors Are Essential To Optimizing Your Cash and Investments. Know Their Background re: Portfolio Optimization and Asset Allocation for Governments Always Solicit (RFP) For Advisors and Have Robust Selection Criteria And Process (including interviews)

GFOA Best Practices Selection and Review of Investment Advisors Due Diligence on Bank and Treasury Management Providers Government Relationships with Securities Dealers Investment Program for Public Funds

Strategies Ground Program On Government’s Risk Tolerance Develop Clear Return Objective and Risk Tolerance Objective Have Clear Documentation Of Constraints (liquidity, time horizon, regulatory, taxes, unique circumstances) Determine Whether To Commingle Cash For Optimal Investment Bifurcate Into Liquidity And Core Investment Components and Understand Different Strategies for Both

GFOA Best Practices Managing Risk in Investment Portfolios Diversifying the Investment Portfolio Using Benchmarks to Assess Portfolio Risk and Return

Documentation & Reporting Compliance report (with sector and issuer limits, diversification requirements, maturity/duration restrictions, other Performance appraisal vs. benchmark Attribution analysis what caused the under/out-performance