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Report To: General Government Committee
Date of Meeting: May 5, 2025 Report Number: FSD-015-25
Authored By: Trevor Pinn
Submitted By: Trevor Pinn, Deputy CAO/Treasurer, Finance and Technology
Reviewed By: Mary-Anne Dempster, CAO
By-law Number: Resolution Number:
File Number:
Report Subject: 2024 Annual Investment Report and Policy Review
Recommendations:
1.That Report FSD-015-25, and any related delegations or communication items, be
received;
2.That the revised Policy CP-003 Investment Policy (Legal List), as Attachment 1, be
approved;
3.That the revised Policy CP-011 Investment Policy, as Attachment 2, be approved;
and
4.That all interested parties listed in Report FSD-015-25, and any delegations be
advised of Council’s decision.
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Report Overview
Annually, the Treasurer is required to report to Council on the investment portfolio and
results. Further, it is required that the investment policies be reviewed annually. This report
fulfills this requirement.
The Municipality had an investment return of approximately 8.8%, an amount which is
roughly double the prime rate, providing revenues to the Municipality fro m a non-tax source
that can be used for future capital and operating pressures. It should be noted that
approximately 1/3 of the investment income relates to DC reserve funds and are therefore
restricted in use; however this mitigates cost pressures on DC projects and future DC fee
increases.
This is the first policy review since Council approved the move to Prudent Investor, changes
to the policies are predominantly related to this change. No substantive change in
investment practices or risk tolerance are recommended.
1. Background
1.1 In June 2018, through report FND-011-18, the Municipality of Clarington reviewed and
revised its Investment Policy. This policy requires the Treasurer of the Municipality to
report the state of the Municipality's investments to Council on an annual basis.
1.2 The policy was further reviewed in June 2021 and revised through Report FSD-035-21
to adjust the limits on certain investments to provide additional flexibility to the
Treasurer. These adjustments included a higher limit for financial institutions from 60 to
80 percent, a higher per-institution limit from 20 to 25 percent, an exception in municipal
debt limits for the Region of Durham, and a change to an annual review of the
investment policy rather than once per term.
1.3 In 2023, the Report FSD-025-23 provided the annual update at which time the Policy
was migrated to the new policy format and updated to include reference to Environment,
Social and Governance (ESG) investment considerations.
1.4 In April 2024, Report FSD-015-24 provided the required By-law, Draft Investment Policy,
and the Membership Agreement with ONE JIB required to adopt the Prudent Investor
Standard. At its November 27, 2024 Board Meeting, the ONE JIB approved the
Municipality’s entry into the JIB and the Municipality officially came under the Prudent
Investor Standard. The investment plans for the Municipality were also approved.
1.5 Section 8 of the Municipality’s Investment Policy requires the Treasurer to report on an
annual basis to Council on the performance of the investments, the balance of the
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investment portfolio, and the Municipality’s compliance with the investment policy and
goals.
1.6 A snapshot summary of key information pertaining to the portfolio follows:
Fund
Opening
Balance,
January 2024
Closing
Balance,
December 2024
Investment
Income
Return
on
Average
Balance
General Fund $39,324,462 $38,152,500 $4,303,907 11.1%
Development Charges
Reserve Fund 57,582,467 49,593,067 5,623,697 10.5%
Non-DC Reserve Fund 94,953,787 116,100,518 7,895,269 7.5%
Strategic Capital Reserve
Fund 9,641,508 9,928,765 457,160 4.7%
$201,502,224 $213,774,850 $18,280,033 8.8%
1.7 The nature of the legal list investments does not compare reasonably with most indices
that personal investors may compare. This is due to the restricted nature of the
investments. However, given that the Bank of Canada bank rate averaged 4.73 percent
in 2024, the return is significantly above that rate. Similarly, the average 1 -year Treasury
Bill rate of return was 4.08% which is the low risk rate of return.
1.8 It should also be noted that investment income earned on Development Charges must
stay within the DC reserve funds. This income is used to fund mitigate inflationary
pressures and provide additional funding resources.
Investment Environment in 2023 and 2024
1.9 The last three years have seen significant fluctuations in the interest rate market in
Canada. In January 2022, the interest rate was 0.50, this increased to a high of 5.25
from July 2023 to June 2024. Since July 2024, there have been eight rate changes
bringing the current rate to 3.0 in March 2025.
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1.10 Fixed income investments are impacted by the Bank Rate. Many investments entered
into in 2021 and 2022 would be at low interest rates. As these matured, they were
invested in higher returning investments. With decreasing rates, future returns may not
be as high as 2024 as a result of decreasing interest rates.
1.11 The following chart shows the past three years of the Bank of Canada overnight rate:
1.12 Over the long-term, interest rates have been significantly lower than the past 24 months.
The legal list, which the Municipality has moved away from, is predomina ntly a fixed
income market. Since January 2016, these rates have averaged 2.1 percent.
0
1
2
3
4
5
6
Jul-21 Feb-22 Aug-22 Mar-23 Oct-23 Apr-24 Nov-24 May-25
Bank of Canada Bank Rate
Monthly 2022 to 2025
0
1
2
3
4
5
6
Jan-16Jun-16Nov-16Apr-17Sep-17Feb-18Jul-18Dec-18May-19Oct-19Mar-20Aug-20Jan-21Jun-21Nov-21Apr-22Sep-22Feb-23Jul-23Dec-23May-24Oct-24Mar-25Bank of Canada Bank Rate
Monthly January 2016 to March 2025
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2. Performance of the Investment Portfolio
2.1 The Municipality's portfolio consists of several funds, including general funds, trust
funds, reserve funds, and other investments.
General Fund
2.2 The General Fund is the primary operating fund for the Municipality. This fund has the
least number of active investments. The majority of the investments in this fund are in
the HISA accounts provided by the investment advisors to the Municipality (ONE
Investment, CIBC Woodgundy, BMO Nesbitt Burns and Scotiabank). The HISA
accounts offer favourable interest rates for a highly liquid investment.
2.3 The ONE Investment Inc. HISA was established in September 2016 and held low
balances throughout 2017. In 2018, the Municipality began being more active with its
investments and moved funds from the lower interest -earning bank accounts to the
higher HISA account. At December 31, 2024, the ONE Investment HISA had
approximately $0.0 million (2023 - $0.2 million). Funds were withdrawn from the ONE
HISA in anticipation of the move to Prudent Investor in January 2025.
2.4 Similarly, the investment accounts at CIBC Woodgundy, BMO Nesbitt Burns and RBC
Dominion Securities include a HISA portion. These funds are typically available within 3
business days. The balance in these accounts typically result from maturing
investments being pooled until a purchase can be made. At December 31, 202 4 the
balance in the HISA products with our investment advisors was approximately $16.0
million (2023- $23.0 million) across all funds.
Non-Development Charges Reserve Funds
2.5 The Municipality operates a Non-Development Charges Reserve Fund investment
portfolio for all reserve funds not established under the Development Charges Act,
1997. There is one exception: the Strategic Capital Reserve Fund, a separate fund.
2.6 The total book value of investments is approximately $116.1 million (2023 - $95.0
million), including approximately $37.9 million (2023 - $37.5 million) in bank balances. At
December 31, 2024, the portfolio was comprised of $8.7 million (2023 - $7.9 million) in
GICs with maturities in each of 2025 through 2028 and $24.8 million (2023 - $27.5
million) in bonds with maturities from 2025 to 2033. The equity pool with ONE
Investment was liquidated in 2024 in anticipation of the transfer to the ONE JIB. The
portfolio includes $39.4 million (2023 - $16.1) in principle-protected notes; these are
banknotes which are linked to an index but are issued by a chartered bank. For
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purposes of this report, the TD Bank Reserve Fund bank account is included in this
portfolio.
Development Charges Reserve Funds
2.7 The Development Charges Reserve Fund portfolio meets the obligations of the
Municipality under the relevant legislation for Deve lopment Charges.
2.8 The Municipality closed the two accounts with the ONE Investment Program related to
this fund: a Bond account and an Equity account in December 2024. These funds were
used to provide funds to the ONE JIB in January 2025
2.9 At December 31, 2024, the DC Reserve Fund included $8.9 million in HISA, $3.0 million
in various government bonds, $30.1 million in financial institutions and $1.6 million in
corporate debt. Of the investments, $24.0 million were in bonds and $8.1 million in
Principal Protected Notes.
Strategic Capital Reserve Funds
2.10 The Municipality established the Strategic Capital Reserve Fund portfolio to hold
investments for the Strategic Capital Reserve Fund specifically. This reserve fund was
created to provide a funding source for economic development activities. The intent was
to keep the $10.0 million capital as a source of internal borrowing for economic
development capital investments. Interest earned on the investments is transferred to
the general fund to offset the tax levy.
2.11 This fund invests $3.9 million (2023 - $2.8 million) in GICs with maturities in 2027.to
2029. Interest rates vary from 2.97 percent to 5.0 percent. Bonds worth $3.6 million
(2023 - $4.8 million) with maturities from June 2024 to January 2032 are also held with
an interest rate of 1.4 to 3.1 percent. There is also $2.0 million in HISA balances as a
result of timing at year end and pending investments.
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Overall Performance
2.12 The total income for the past five years, excluding trust funds and Elexicon, by fund a re
summarized below:
Fund 2024
Income
2023
Income
2022
Income
2021
Income
2020
Income
General Fund $4,303,907 $4,812,802 $3,808,056 $1,060,573 $1,046,664
Development Charges
Reserve Fund 5,623,697 1,695,019 1,694,340 624,705 923,855
Non-DC Reserve
Funds 7,895,269 1,582,907 1,600,751 1,123,800 1,343,802
Strategic Capital
Fund 457,160 (402,115) 372,817 612,865 45,342
Total Investment $18,280,033 $7,688,614 $7,475,964 $3,421,943 $3,359,663
3. Compliance with Investment Policy
3.1 The Municipality of invests based on the legal list of investments outlined in O.Reg.
438/97 as amended. The legal list is very prescribed and limits the ability of the
Municipality to diversify its investments fully; however, it is relatively secure.
Investment Accounts
3.2 The Municipality of Clarington holds its investments through investment accounts with
several financial organizations. In determining whether the Municipality is meeting its
investment policies, the underlying asset is considered, not the custodian of the
investment.
3.3 No new investment accounts were opened in 2023.
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3.4 The Municipality held the following accounts throughout 2024:
Institution Accounts Held
TD Bank General Fund bank
Several small bank accounts
Reserve Fund bank account
Guaranteed Investment Certificates
(GICs)
RBC Dominion Securities Reserve Fund investment account
DC Reserve Fund investment account
Strategic Capital Fund investment
account
ONE Investment Inc. Hight Interest Savings Account (HISA)
Equity portfolio investment account
Bonds portfolio investment account
BMO Nesbitt Burns General fund investment
Reserve Fund investment account
CIBC Woodgundy DC Reserve Fund investment account
General Fund investments
ScotiaBank High Interest Savings Account (HISA)
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3.5 The investment accounts with RBC Dominion Securities, BMO Nesbitt Burns, and CIBC
Woodgundy hold a variety of investment instruments which could include GICs,
government bonds, and bank deposit notes.
3.6 As a result of the changes to Prudent Investor, it was determined by staff that the
Municipality did not require all of the investment accounts and consolidation occurred in
December 2024 and was completed in January 2025.
3.7 Over the year end, the accounts with RBC Dominion Securities were transferred in kind
to the custody of CIBC Woodgundy and the accounts with RBC Dominion Securities
were closed. The ONE Investment portfolios were also closed and those funds were
transferred to the ONE JIB. Finally, the HISA with Scotiabank was closed and funds
were reinvested.
Diversification Risk
3.8 The Municipality holds investments of several different types. It is essenti al to diversify
the types of investments with an extensive portfolio to reduce the risk to the overall
portfolio from variations in any one market. The following table shows the December 31,
2024, investments by type as well as the minimum and maximum percentage allowed
per the Investment Policy:
Investment Type
Book Value at
December 31,
2024
Percentage
of Holdings
Minimum
Range
Maximum
Range
High Interest Savings
Account $51,976,906 24.3% 0% 100%
Federal Debt 9,040,318 4.2% 0% 100%
Provincial Debt 19,837,121 9.3% 0% 80%
Municipal Debt 3,3844,184 1.8% 0% 35%
Financial Institutions 124,976,725 58.5% 0% 80%
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Investment Type
Book Value at
December 31,
2024
Percentage
of Holdings
Minimum
Range
Maximum
Range
Corporate Debt (non-
financial) 4,099,594 1.9% 0% 10%
Total $213,774,850
3.9 The policy guideline for financial institutions is zero percent to 80 percent of the
investment portfolio. At December 31, 2024, the Municipality was within this limit. While
within the policy limits, the above indicates that the Municipality is concentrated in
Canadian financial institutions.
Liquidity Risk
3.10 The Municipality attempts to balance cash flows through the timing of the maturity of
investments. Staggered maturity dates ensure that cash is readily available to meet the
needs of the Municipality and reduces interest rate risk. At December 31, 2024, the
maturity dates, and allowable ranges, of investments held by the Municipality were as
follows:
Timeframe Book Value at
December 31, 2024
Percentage
of Portfolio
Minimum
Range
Maximum
Range
Up to 90 Days $56,111,458 26.2% 20.0% 100.0%
Up to 1 Year 8,416,634 30.2% 30.0% 100.0%
1 to 5 Years 50,174,399 23.5% 0.0% 85.0%
5 to 10 Years 99,072,359 46.3% 0.0% 50.0%
$213,774,850
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3.11 The Municipality's Investment Policy indicates the target range for less than 90 days is
20% to 100%, and less than one year is 30% to 100%. The amount shown above that is
90 days to 1 year should be added to the amount held less than 90 days to determine
compliance with the requirement. Total amounts maturing less than one year is $64.5
million, which is 30.2% of the investment portfolio.
3.12 The Municipality's HISA and TD Reserve Fund bank accounts are considered to have a
maturity of less than 90 days, as they are available to the Municipality within 24 hours.
Concentration Risk
3.13 The Municipality attempts to diversify its investment portfolio by restricting the
percentage of investments any single institution may have. Diversification mitigates the
risk to the Municipality if an investment becomes insolvent. Note that the Canadian
Deposit Insurance Corporation (CDIC) only guarantees investments up to $100,000 per
institution, therefore, most of the Municipality's investments are not insured through
CDIC.
3.14 At December 31, 2024 the Municipality's investments by institution were as follows:
Institution
Book Value at
December 31,
2024
Percentage
of Portfolio
Maximum
Allowed
TD Bank - Savings 37,973,104 17.8% 100.0%
Royal Bank of Canada 14,883,269 7.0% 25.0%
Royal Bank of Canada HISA 11,803,640 5.5% 100.0%
CIBC - HISA 4,194,714 2.0% 100.0%
National Bank 4,023,420 1.9% 25.0%
Bank of Nova Scotia 31,819,508 14.9% 25.0%
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Institution
Book Value at
December 31,
2024
Percentage
of Portfolio
Maximum
Allowed
Bank of Montreal 33,147,333 15.5% 25.0%
CIBC 32,329,700 15.1% 25.0%
TD Bank 6,778,944 3.2% 25.0%
Province of Ontario 13,038,602 6.1% 20.0%
Province of British Columbia 968,290 0.5% 20.0%
Province of Manitoba 962,429 0.5% 20.0%
Regional Municipality of Durham 1,001,760 0.5% 10.0%
Quebec Hydro 1,600,000 0.7% 5.0%
City of Toronto 1,512,039 0.7% 10.0%
Canada Housing Trust 2,059,140 1.0% 100.0%
Canada Housing Trust No 1 3,058,623 1.4% 100.0%
Government of Canada 3,922,555 1.8% 100.0%
Municipal Finance Authority of BC 831,861 0.4% 25.0%
Municipality of Clarington Page 13
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Institution
Book Value at
December 31,
2024
Percentage
of Portfolio
Maximum
Allowed
Province of Alberta 1,939,216 0.9% 20.0%
Province of Quebec 2,928,585 1.4% 20.0%
Ontario Hydro 2,499,594 1.2% 5.0%
Regional Municipality of York 498,525 0.2% 10.0%
$213,774,850
3.15 At December 31, 2024, the Municipality was in compliance with restrictions on per
institution investments. Throughout 2024, Staff worked to increase diversification for a
better overall investment portfolio and risk mitigation.
Overall Compliance and Work-out Program
3.16 One of the investments held by the Municipality was a structured note with a Canadian
Schedule I Bank; however, it was considered a “Principal-At-Risk” note. This structured
note had the potential to mature at an amount below the principal amount. While these
notes are similar to Principal-Protected-Notes in that they are tied to an index, the PPN
will not drop below the principal amount.
3.17 Once staff became aware that the note was not a PPN, a work-out plan was created.
The note was sold from the Municipality’s investment holdings along with investments
that were in a positive position to realize overall a net gain. This transaction occurred
within the month of January 2025.
3.18 As at December 31, 2024, a work-out plan for this investment was in place; therefore,
the Municipality was in compliance with O.Reg. 438/97 as amended.
3.19 The Municipality was in compliance with CP-003 Investment Policy (Legal List), which
governs money not required immediately, as it requires a work-out plan to be put in
place for any investments determined to be ineligible in accordance with the legal list.
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4. Review of Investment Policy
Background
4.1 The Municipality of Clarington is required, under the Municipal Act, 2001 to have an
investment policy adopted and approved by Council.
4.2 In 2024, the Municipality proceeded to adopt the Prudent Investor Standard. Staff
recommended at the time, and continue to recommend, that Council approves two
distinct investment policies. There is an overall policy, which governs th e Prudent
Investor Policy (CP-011) and a Legal List policy which governs the short-term (money
required immediately) investment portfolio. The short-term portfolio is not anticipated to
require significant changes going forward.
Proposed Revised CP-003- Investment Policy (Legal List) (Attachment 1)
4.3 Minor changes are proposed and reflect the change to the Prudent Investor standard.
4.4 Changes to the purpose and legislative authority reflect the change to Prudent Investor
and provide clarity as to the purpose and scope of the short-term investment policy.
Further, housekeeping changes to titles and department names. Approval requirements
for all trades has been changed as a result of updated signing authority policies and to
better align with those policies.
4.5 References to investment term limits for five to ten years, and over ten years are
removed as a result of the fact that these funds would be considered Money Not
Required Immediately.
Proposed Revised CP-011 – Investment Policy (Attachment 2)
4.6 The proposed changes to Policy CP-011 Investment Policy are substantially
housekeeping in nature and reflect changes by ONE Investment and ONE JIB in their
operations.
4.7 References to “portfolio manager” has been changed to “Sub -Investment Manager” to
reflect the change to the OCIO. Language throughout the policy has been changed to
reflect that change.
4.8 The terms “Long-Term Money” and “Short-Term Money” have been changed to “MNRI”
and “MRI” respectively. This change better aligns with the legislation and reflects that
there is not a time requirement for the definition of money required immediately or
money not required immediately.
4.9 Definitions were added as required and deleted if no longer used in the document.
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4.10 Restricted Special Assets are listed in Schedule A. This is a new definition to provide
clarity on several types of investments that are not intended to be included in MNRI, and
therefore under the control of the ONE JIB. The Municipality’s investments in Elexicon
are listed in Schedule A.
4.11 Third-Party Trust Funds and Designated Funds are now listed in Schedule B. The ONE
JIB is not responsible for the investment of these funds. The Municipality’s trust funds
are listed in Schedule B.
4.12 A new section on Alternative Asset Classes has been added. This includes investments
such as real estate. The Policy allows this type of investment; however it would still be
up to the ONE JIB to determine if these types of investments make sense in the
Municipality’s Investment Plan. At this time, it is being recommended to permit
Alternative Asset Classes to provide the greatest number of options to the Board;
however if Council wishes to restrict its use the section may be amended.
4.13 The above changes are recommended by ONE JIB and are an effort to provide
consistent wording across the member municipalities. Staff have reviewed the changes
proposed and do not have concerns with these changes.
4.14 Staff have reviewed the section on Prohibited Investments. At this time staff are not
recommending any changes to this section, that is to say that staff are not
recommending prohibiting investments. Given the current trade relationship with the US,
there are increased desires to diversify from the this relationship; however, given the
sheer size of the US market a prohibition on US investments would not be prudent and
would be counter to Council’s decision to move to Prudent Investor to open up
investment opportunities.
5. Other Information Relevant to Council
Board Appointments
5.1 At its meeting of March 28, 2025, the Board of CHUMs (a subsidiary of the Municipal
Finance Officers Association of Ontario) appointed Trevor Pinn as the Vice -Chair of
ONE Investment Inc for 2025-2026 and Chair for the years 2027-2028.
5.2 Additionally, at its April meeting, the Audit Committee of ONE Investment appointed
Trevor Pinn as the Vice-Chair of the Audit Committee.
5.3 Internally, processes are in place to ensure that there is a vetting process in place for
investment decisions related to ONE Investment. The annual determination of Money
Not Required Immediately, is performed by the Financial Planning team and reviewed
by the Treasurer. This is the amount that is provided to ONE JIB, which is independent
of ONE Investment.
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Prudent Investor Update
5.4 At its meeting of November 21, 2024, the ONE JIB accepted the Municipality as a
member municipality. The Municipality’s investment plan was presented to the Board by
PH&N for acceptance.
5.5 The Municipality transferred funds of $20 million to the ONE JIB on January 13, 2025 for
investment. These funds represent the estimated Money Not Requ ired Immediately,
which is required to be given to the ONE JIB for investment. These funds are estimated
to have a long-term time frame, as funds are not expected to be pulled from this amount
until approximately 10 years (this is reviewed annually).
5.6 The investment plan approved by the ONE JIB utilizes nine different funds all operated
by RBC Global Asset Management. The model is considered a long-term 70% equity
model and includes: 30% Canadian fixed income, 35% Canadian equities and 35%
global equities.
5.7 At March 31, 2025 the ONE JIB fund breakdown was as follows:
Fund Description Book Cost Market Value
PH&N Short Term Bond & Mortgage Fund $5,766,577 $5,843,804
RBC Commercial Mortgage Fund 300,000 300,000
PH&N Canadian Equity Value Fund 2,333,333 2,394,833
PH&N Canadian Equity Fund 2,333,333 2,381,510
RBC QUBE Canadian Equity Fund 2,333,334 2,376,265
RBC QUBE Low Volatility US Equity Fund 1,400,000 1,511,606
PH&N US Equity Fund 700,000 672,141
RBC QUBE US Equity Fund 700,000 665,908
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Fund Description Book Cost Market Value
RBC International Equity Fund 2,100,000 2,208,393
PH&N Overseas Equity Fund 2,100,000 2,171,871
$20,066,577 $20,526,331
5.8 The initial $20.0 million investment has resulted in a current market value of $20.5
million which represents a return of 2.6% in 2.5 months.
6. Financial Considerations
6.1 The 2024 Annual report provides historical results, historical results are not indicative of
future results due to many external economic factors outside of the control of the
Municipality.
6.2 The allowance of “Alternative Asset Classes” provides potential diversification
opportunities in real estate or other investments that are not typically traded or held by
municipalities within the legal list investments. This opportunity is optional and ONE JIB
will review the appropriateness of its use in the investment plan process it undertakes
annually. Restriction investments in Alternative Asset Classes would result in less ability
to diversify.
6.3 While Canada and the US are currently in a trade dispute, given the fact that the US is
the largest investment market in the world, it is not financially prudent to prohibit
investments in the US. The ONE JIB investment plan currently has investments in other
global markets which mitigates the reliance on the US markets..
7. Strategic Plan
Not Applicable
8. Climate Change
Not Applicable.
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9. Concurrence
Not Applicable.
10. Conclusion
It is respectfully recommended that Council approve the revised policies CP-003
Investment Policy (Legal List) and CP-011 Investment Policy (Prudent).
Staff Contact: Trevor Pinn, CPA, CA, Deputy CAO/Treasurer, 905-623-3379 x2602 or
tpinn@clarington.net.
Attachments:
Attachment 1 – Draft Revised CP-003 – Investment Policy (Legal List) red-line version
Attachment 2 – Draft Revised CP-011 – Investment Policy (Prudent) red-line version
Interested Parties:
The following interested parties will be notified of Council's decision:
ONE JIB
CIBC Woodgundy
BMO Nesbitt Burns
Attachment 1 to Report FSD-015-25
Council Policy
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Page 1 of 17
Formatted: Right
Formatted: Font: 12 pt
Number: CP-003
Title: Investment Policy (Legal List)
Type: Financial Management
Sub-type: Investments
Owner: Financial Services
Financial Planning
Approved By: Council
Approval Date: July 3, 2018
Effective Date: July 3, 2018
Revised Date: May 29, 2023
Applicable to: All Staff
1. Legislative or Administrative Authority:
1.1. Effective November 27, 2024, the Municipality of Clarington officially
met the requirements under Section 418.1 of the Municipal Act to
follow the Prudent Investor Standard. The Municipality has entered into
an agreement with the ONE Joint Investment Board (ONE JIB) to meet
the requirement of having an investment board under Section 418.1.
1.1.1.2. This policy was developed in accordance with Section 418 of the
Municipal Act, 2001, which authorizes a municipality to invest in
prescribed securities, in accordance with prescribed rules, money that
it does not require immediately. The policy follows Ontario Regulation
438/97, Eligible Investments, Related Financial Agreements and
Prudent Investment
2. Purpose:
2.1. To provide guidance for the investment of funds deemed “Money
Required Immediately”.
2.1.2.2. The Municipality of Clarington strives for the optimum utilization of its
cash resources within statutory limitations and the basic need to
protect and preserve capital, while maintaining solvency and liquidity to
meet ongoing financial requirements.
Formatted: Header distance from edge: 0.6"
Attachment 1 to Report FSD-015-25
Council Policy
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Page 2 of 17
Formatted: Right
Formatted: Font: 12 pt
3. Scope:
3.1. This policy includes all funds that are managed by the Municipality of
Clarington except for the Municipality’s investment in Elexicon Group.
4. Definitions:
4.1. Asset Backed Securities – Fixed income securities (other than a
government security) issued by a Special Purpose Entity, substantially
all of the assets of which consist of Qualifying Assets.
4.2. Basis Point – A unit that is equal to 1/100th of 1% and is used to
denote the change in a financial instrument. The basis point is
commonly used for calculating changes in interest rates, equity
indexes and the yield of a fixed-income security.
4.3. CHUMS Financing Corporation (CHUMS) – A subsidiary of the
Municipal Finance Officers Association of Ontario (MFOA) which in
conjunction with the Local Authority Services Limited (LAS) operates
the ONE Investment Program.
4.4. Credit Risk - The risk to an investor that an issuer will default in the
payment of interest and/or principal of a security.
4.5. Discount – The amount by which the par value of a security exceeds
the price paid for the security.
4.6. Diversification – A process of investing assets among a range of
security types by class, sector, maturity and quality rating.
4.7. Duration – A measure of the timing of the cash flows, such as the
interest payments and the principal repayment, to be received from a
given fixed-income security. This calculation is based on three
variables: term to maturity, coupon rate, and yield to maturity. The
duration of a security is a useful indicator of its price volatility for given
changes in interest rates.
4.8. Environmental, Social and Governance (ESG) Investing –
considering and integrating ESG factors into the investment process,
rather than eliminating investments based on ESG factors alone.
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Integrating ESG information can lead to more comprehensive analysis
of a company.
4.9. Holding Period Classification – Classification of investments based
on the intended period the Municipality would hold the asset, as
follows:
4.9.1. Cash Equivalent: short-term highly liquid investments that are
readily convertible to known amounts of cash and that are
subject to an insignificant risk of changes in value.
4.9.2. Short-term: securities with a holding period of one year or less.
4.9.2.4.9.3. Medium-term: securities with a holding period of one
to three
4.9.3.4.9.4. Long-term: securities with a holding period of greater
than one three years.
4.10. Liquidity – A measure of an assets’ convertibility to cash
4.11. Local Authority Service Limited (LAS) – A subsidiary of the
Association of Municipalities of Ontario (AMO) which in conjunction
with CHUMS are members of the ONE Investment Inc.
4.12. ONE Investment Inc. – An incorporated not-for-profit organization
which includes investment portfolios available for Ontario
municipalities. Formerly was the ONE Investment Program which is a
professionally managed group of pooled investments that meet
eligibility criteria as defined by regulations under the Municipal Act.
Also includes the High Interest Savings Account (HISA).
4.13. Market Risk – The risk that the value of a security will rise or decline
as a result of changes in market conditions.
4.14. Market Value – The current market price of a security.
4.15. Maturity – The date on which payment of a financial obligation is due.
The final stated maturity is the date on which the issuer must retire a
bond and pay the face value to the bondholder.
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4.16. Par – The face value or principal value of a bond.
4.17. Premium – The amount by which the price paid for a security exceeds
the security’s par value.
4.18. Principal – The face or par value of a debt instrument or the amount
of capital investment in a given security.
4.19. Rate of Return – The yield obtainable on a security based on its
purchase price or its current market price. Yield reflects coupon, term,
liquidity and credit quality.
4.20. Schedule I Bank – Schedule I banks are domestic banks and are
authorized under the Bank Act to accept deposits, which may be
eligible for deposit insurance provided by the Canadian Deposit
Insurance Corporation.
4.21. Schedule II Banks – Schedule II banks are foreign bank subsidiaries
authorized under the Bank Act to accept deposits, which may be
eligible for deposit insurance provided by the Canada Deposit
Insurance Corporation. Foreign bank subsidiaries are controlled by
eligible foreign institutions.
4.22. Sinking Fund – Money accumulated on a regular basis, through
regular contributions and interest earnings, in a separate custodial
account that is used to redeem debt securities by a specified date.
4.23. Weighted Average Maturity (WAM) – The average maturity of all the
securities that comprise a portfolio.
4.24. Yield to Maturity (YTM) – The annual return on a bond held to
maturity when interest payments and price appreciation (if priced
below par) or depreciation (if priced above par) are considered
5. Policy Requirements:
General
5.1. For money-required immediately, the Municipality follows the Eligible
Investment rules outlined in O.Reg.438/97.
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5.1.5.2. The primary objectives of the investment short-term investment
program, in order of priority, shall be:
5.2.5.3. Adherence to Statutory Requirements
5.2.3.5.3.2. Investments, unless limited further by Council, will be
those deemed eligible under O.Reg 438/97 as amended.
5.3.5.4. Preservation of Capital
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Diversifying longer-term holdings to match term
exposures to requirements of underlying reserve funds
and to mitigate effects of interest rate volatility.
5.4.5.5. Maintaining Liquidity
5.4.2.5.5.2. The portfolio shall consist largely of securities with
active secondary or resale markets to ensure liquidity. A
portion of the portfolio may be placed in local government
investment pools which offer liquidity for short-term funds.
5.5.5.6. Competitive Rate of Return
5.5.2.5.6.2. Diversification, as well as ensuring safety of principal
by limiting exposure to credit, sector or term risk, provides
opportunities to enhance the investment return on the
Municipality’s portfolio.
Standards of Care
5.6.5.7. Prudence
Formatted: Indent: Left: 2.13", No bullets or numbering
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5.6.2.5.7.2. Staff acting in accordance with procedure and this
investment policy and having exercised due diligence, shall be
relieved of personal responsibility for any individual security’s
credit risks or market price changes, provided deviations from
expectations are reported in a timely fashion and the
liquidation or sale of securities are carried out in accordance
with the terms of this policy.
5.7.5.8. Ethics and Conflict of Interest
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5.8.5.9. Safekeeping and Custody
5.9.5.10. Authority
5.9.2.5.10.2. The authority to enter into arrangements with banks,
investment dealers and brokers, and other financial institutions
for the purchase, sale, redemption, issuance, transfer and
safekeeping of securities shall be done in a manner that
conforms to the Municipal Act, 2001 and the Municipality’s
policies, including the Delegation of Authority By-law.
5.10.5.11. Approval Requirements
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5.10.2.5.11.1. Signing authority for transactions from the
Municipality’s bank account to an investment account would
follow the signing authorities outlined in the Banking Signing
Authorities Policy.
5.11.5.12. Council Reporting
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5.11.2.5.12.2. If an investment made by the Municipality is, in the
Treasurer or designate’s opinion, not consistent with the
investment policies and goals adopted by the Municipality, the
Treasurer shall report the inconsistency to Councilcreate a
work-out plan in accordance with O.Reg 438/97 within 30 days
after becoming aware of it.
5.12.5.13. Eligible Investments and Statutory Requirements
5.12.1.5.13.1. The Municipality maintains the following funds:
The DC study has a
horizon of 5 years, within
this fund there will be
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withdrawals and deposits
annually.
This fund has an
investment horizon of over
5 years.
The key investment driver
is to earn a return which
can be used to fund other
activities while preserving
capital.
May include funds held for
the perpetual care of
cemeteries under the
control of the Municipality.
This fund has an
investment horizon of 5
years.
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5.12.2.5.13.2. The above categories are funds which manage
similar accounts. For example the Development Charge
Reserve Fund invests for all individual DC Reserve Funds,
individual accounts are not required to be established. An
individual investment security may be made utilizing funds
from different sources (i.e. a GIC in the DC Reserve Fund may
relate to general government, parks and road DC reserve
funds).
5.13.5.14. Eligible Securities
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5.14.5.15. Investment Limitations
Formatted Table
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Formatted Table
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5.15.5.16. Environmental, Social and Governance (ESG) Investing
5.15.1.5.16.1. The Municipality supports incorporating ESG
investing into the Portfolio. The Municipality believes that well-
managed companies are those that demonstrate high ethical
and environmental standards and respect for their employees,
human rights, and the communities in which they do business
and that these actions contribute to long-term financial
performance.
5.16.5.17. Policy Review
5.16.1.5.17.1. This policy shall be reviewed annually and updated
as necessary.
6. Roles and Responsibilities:
6.1. Council is responsible for:
6.1.1. Setting the investment policy for the Municipality.
6.1.2. Determining the risk tolerance of the Municipality.
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6.2. Deputy CAO/Treasurer is responsible for:
6.2.1. Establishing internal controls around the investment and
banking process.
6.2.2. Determining an investment plan in compliance with the
Investment Policy.
6.2.3. Ensuring the Municipality’s investment plan is in compliance
with legislation.
6.2.4. Reporting to Council investment information in compliance
with the Policy and the legislation.
6.3. Directors / Managers are responsible for the following within their
scope of authority:
6.3.1. Making investment decisions in compliance with the
Investment Policy.
6.4. All Staff are responsible for:
6.4.1. Following the Investment Policy.
7. Related Documents:
7.1. O.Reg.438/97: Eligible Investments, Related Financial Agreements
and Prudent Investment
7.2. Delegation of Authority By-law
8. Inquiries:
8.1. Manager, Financial Planning/Deputy Treasurer
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9. Revision History:
Date Description of Changes Approved By
June 12, 2023 Update format to new policy
template
Add definition and section on
Environment, Social and
Governance (ESG) Investing
Council
April 22, 2024 Policy name changed with
additional Investment Policy added
(CP-011)
Council
May XX, 2025 Removed references which are no
longer required as a result of
moving to Prudent, including term
limits beyond 5 years (removed).
Council
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Number: CP-011
Title: Investment Policy
Type: Financial Management
Sub-type: Investments
Owner: Finance and Technology
Financial Planning
Approved By: Council
Approval Date: April 22, 2024
Effective Date: April 22, 2024
Revised Date:
Applicable to: Finance and Technology
1. Legislative or Administrative Authority:
1.1. This policy was developed in accordance with Section 418.1 of the Municipal
Act, 2001, which authorizes a municipality to invest money that it does not
require immediately in accordance with the prudent investor standard. The
policy follows the Ontario Regulation 438/97, Eligible Investments, Related
Financial Agreements and Prudent Investment.
2. Purpose:
2.1. This Investment Policy Statement (IPS) governs the investment of the
Municipality's Money Not Required Immediately (MNRI) and Money Required
Immediately (MRI). lt is intended, among other things, to direct the Deputy
CAO/Treasurer, Finance and Technology/Treasurer in the investment of MRI
and to direct ONE Joint Investment Board (ONE JIB) in the investment of
MNRI by implementing the Authorizing By-law 2024-016 pursuant to which the
Municipality authorized the establishment of guidelines for the prudent
management of the Municipality's MNRI pursuant to section 418.1 of the Act.
2.2. ln addition to the Municipality's MRI and MNRI, the Municipality is from time to
time entrusted with the management of money and investments for a third-
party beneficiary ("third-party trust funds"). The Municipality’s Third-Party Trust
Funds are listed in Schedule B of this Policy.
2.3. There are also sources of money in which the Municipality may have an
indirect interest but which the Municipality currently has no authority to invest.
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Such sources of money, referred to in this IPS as "designated funds", are listed
in Schedule A attached hereto. The designated funds are identified in this IPS
for the sole purpose of enabling the Municipality to better see, on an
aggregated basis, the various financial assets in which the Municipality has an
interest. The Municipality is not responsible for the investment activities or
performance of designated funds.
2.4. The goals of this IPS are to:
a) Define and assign responsibilities for investment of MRI and MNRI;
b) Describe the Municipality’s responsibilities with respect to third -party trust
funds and designated funds;
c) Ensure compliance with the applicable legislation;
d) Direct ONE JIB as to the Municipality’s investment goals and risk
tolerance;
e) Provide guidance and limitations regarding the investments and their
underlying risks;
f) Establish a basis of evaluating investment performance and the
underlying risks; and,
g) Establish a reporting standard to Council.
2.5. This IPS applies to employees of the Municipality, to ONE JIB and to the
employees of ONE Investment. ONE JIB, the Deputy CAO, Finance and
Technology/Treasurer, and any agent or advisor providing services to ONE JIB
in connection with the investment of the portfolio shall accept and strictly
adhere to this IPS.
3. Scope:
3.1. This policy includes all funds that are managed by the Municipality of
Clarington.
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4. Definitions:
4.1. Act – means the Municipal Act, 2001, S.O. 2001, c. 25, as amended from time
to time.
4.2. Agent – means any administrator, Custodian, payment servicer, portfolio
manager, investment counsel, consultant, banker, broker, dealer or other
service provider engaged or appointed by ONE JIB and authorized by ONE JIB
to exercise any of the functions of ONE JIB pursuant to a written agreement, in
the manner and to the extent provided in the Regulation and without limiting
the generality of the foregoing, Agent includes ONE Investment.
4.3. Alternative Assets – means investments outside traditional investments such
as equities, fixed income, and cash which may include, hedge funds, private
equity, natural resources, real estate and infrastructure. Alternative
investments are typically less liquid than traditional investments, are
appropriate only for allocations with a long investment horizon.
4.3.4.4. Asset Class – An asset class is a specific category of assets or investments,
such as cash, fixed income, equities, alternative investments, real estate etc.
4.4.4.5. Asset Mix (or Asset Allocation) – means the proportion of each asset class
in a portfolio. Asset classes include bank deposits, money market securities,
bonds and equities, among other things.
4.5.4.6. Authorizing By-law – means a by-law of a Founding Municipality which
authorizes: (i) the entering into of the Initial Formation Agreement; (ii) the
establishment of ONE JIB; (iii) the approval of the Client Questionnaire and the
adoption of the IPS; and (iv) the entering into of the ONE JIB Agreement.
4.6.4.7. Benchmark – means an index that is representative of a specific securities
market (e.g. the S&P/TSX Composite Index, the FTSE/TMX 91 Day T-bill
Index, etc.) against which investment performance can be compared.
Performance benchmarks refer to total return indices in Canadian dollar terms.
4.8. CHUMS Financing Corporation (CHUMS) – means a subsidiary of Municipal
Finance Offcers’ Association of Ontario (MFOA) which, in conjunction with
LAS, established ONE Investment.
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4.7.4.9. CFA Institute – refers to the global, not-for-profit professional association that
administers the Chartered Financial Analyst (CFA) and the Certificate in
Investment Performance Measurement (CIPM) curricula and examination
programs worldwide, publishes research, conducts professional development
programs, and sets voluntary, ethics-based professional and performance
reporting standards for the investment industry.
4.8. Credit Risk – means the possibility of a loss resulting from a borrower’s failure
to repay a loan or meet contractual obligations. That is, the risk that a lender
may not receive the owed principal and interest.
4.9.4.10. Custodian – means a specialized financial institution that is responsible
for safeguarding a municipality’s investments and is not engaged in “traditional”
commercial or consumer/retail banking. Global custodians hold investments
for their clients in multiple jurisdictions around the world, using their own local
branches or other local custodian banks (“sub-custodians” or “agent banks”).
4.11. Designated Funds – means source(s) of money in which the Municipality may
have an indirect interest but which the Municipality currently has no authority to
invest. Designated Funds are listed in Schedule B of this Policy.
4.10.4.12. Derivative – A derivative is a contract between two or more parties
whose value is based on an agreed-upon underlying financial asset (like a
security) or set of assets (like an index). Common underlying instruments
include bonds, commodities, currencies, interest rates, market indexes, and
stocks.
4.13. Diversification – means a risk management technique that mixes a variety of
investment types within a portfolio to help mitigate portfolio risk. A diversified
portfolio holds different kinds of investments to improve the risk adjusted
returns.
4.11.4.14. Environmental, Social and Governance (ESG) Investing – means
considering and integrating ESG factors into the investment process, rather
than eliminating investments based on ESG factors alone. Integrating ESG
information can lead to more comprehensive analysis of a company.
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4.12. Interest Rate Risk – refers to the possibility that the value of a bond or other
fixed-income investment will suffer as the result of a change in interest rates.
Interest rate risk can be managed to help improve investment outcomes.
4.13.4.15. Internal Controls – means a system of controls that may include
authorities, policies, procedures, separation and segregation of duties,
compliance checks, performance measurement and attribution, reporting
protocols, measures for safekeeping of property and data, and the audit
process.
4.14.4.16. Investment Plan – means the investment plan applicable to the Long-
Term Money investmentsMNRI and adopted by ONE JIB under the Regulation,
as it may be amended from time to time.
4.15.4.17. Investment Policy Statement (IPS) – means the investment policy
applicable to the Municipality’s investments adopted and maintained by the
Council of the Municipality for Long-Term MoneyMNRI under the Regulation,
and for Short-Term MoneyMRI, as the same may be amended from time to
time. The IPS may also apply to the money and investments held by the
Municipality for the benefit of persons other than the Municipality itself and may
make reference to source(s) of money in which the Municipalit y may have an
indirect interest but which the Municipality has no authority to invest.
4.16.4.18. JIB – is short for Joint Investment Board and means a joint municipal
service board that is established under section 202 of the Act by two or more
municipalities for the purposes of Part II of the Regulation.
4.17.4.19. Legal List Securities – means the securities and other investments and
financial instruments that are included from time to time in Part I of the
Regulation.
4.18.4.20. Leverage – means an investment strategy of using borrowed money—
specifically, the use of various financial instruments or borrowed capital—to
increase the potential return of an investment. Typically leverage also tends to
increase investment risks.
4.21. Liquidity – means the ability to turn an investment into cash relatively quickly,
without a substantial loss in value. For example, a savings account is more
liquid than real estate.
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4.22. Local Authority Services (LAS) – means an entity which, in conjunction with
MFOA/CHUMS, established ONE Investment.
4.19.4.23. Local Distribution Corporation or LDC – means a corporation
incorporated under section 142 of the Electricity Act, 1998.
4.20. Long-Term Money – means money that the municipality has defined as long-
term and characterized as money that is not required immediately by the
Municipality as described in section 5.16 Monies that are Long Term Money
will be invested in accordance with the Prudent Investor Standard.
4.24. Market Value – means the price at which a security is trading and could
presumably be sold. Also known as Fair Value it represents the current value
of the investment.
4.25. Maturity – means the date upon which the principal or stated value of an
investment becomes due.
4.21. Modern Portfolio Theory – means a theory of portfolio management that
looks towards the portfolio as a whole, rather than towards the prudence of
each investment in the portfolio. This is found in the CFA Institute Standards of
Practice Handbook.
4.22.4.26. Money Required Immediately (MRI) – municipal funds not included in
the Money Not Required (MNRI) definition included in this policy, funds are
governed in accordance with Section 418 of the Act.
4.23.4.27. Money Not Required Immediately (MNRI) – long term municipal funds
defined in this policy, that are governed by the Prudent Investor Standard in
accordance with Section 418.1 of the Act.
4.28. Municipal Services Corporation (MSC) – means a corporation established
under section 203 of the Act in accordance with the applicable regulation
(Ontario Regulation 599/06).
4.24.4.29. Municipality – means the Municipality of Clarington.
4.25.4.30. OCIO Offering - means the comprehensive investment program made
available through ONE Investment as agent for ONE JIB, where a qualified
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investment manager is engaged to advise a Participating Municipality with
regard to the investment of the Participating Municipality’s MNRI and to invest
and manage such MNRI in accordance with the terms and conditions set out in
the ONE JIB Agreement.means the comprehensive investment program made
available through ONE JIB pursuant to which a duly qualified investment
manager who is an External Portfolio Manager is engaged by ONE Investment
to advise a participating municipality with regard to the investment of the
participating municipality’s Managed Assets and to invest and manage such
Managed Assets in accordance with the terms and conditions set out in the
ONE JIB Agreement.
4.31. ONE Investment – means the not-for-profit corporation established by
CHUMS and LAS which provides certain management, administrative and
other services to ONE JIB as its agent.
4.26.4.32. ONE JIB - means ONE Joint Investment Board, established by certain
founding municipalities under section 202 of the Act as a JIB for purposes of
Part II of the Regulation, which is the duly appointed JIB for the Municipality, as
constituted from time to time and which acts in accordance with the Act, the
Regulation, the ONE JIB Agreement, including the Terms of Reference, this
IPS and the Investment Plan.
4.27.4.33. ONE JIB Agreement – means the agreement effective as of TBC,
entered into in accordance with the requirements of the Regulation, pursuant to
which ONE JIB has control and management of the Municipality’s Long-Term
MoneyMNRI.
4.28.4.34. Participating Municipality - means from time to time each of the
municipalities for whom ONE JIB acts as the JIB under the terms of the ONE
JIB Agreement.
4.29.4.35. Pooled Fund - means a unit trust established under a trust instrument,
generally not available to the public, in which institutional, sophisticated or high
net worth investors contribute monies that are invested and managed by an
External Portfolio Manager. Monies are pooled or combined with monies of
other investors.
4.30.4.36. Portfolio - means any collection of funds that are grouped together and
required for specific purposes.
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4.31.4.37. Proxy Voting - means a legal transfer to another party of a shareholder’s
right to vote thereby allowing shareholders who cannot attend meetings to
participate. External Portfolio Managers usually vote proxies on behalf of their
clients.
4.32.4.38. Prudent Effective Date - means the date on which the prudent investor
regime applies to the Municipality.
4.39. Prudent Effective Date Agreement – means an agreement entered into by
the Municipality and ONE Investment that sets out the day on which the
prudent investor regime starts to apply to the Municipality.
4.33.4.40. Prudent Investor Standard - means the standard that applies when the
Municipality invests money that it does not require immediately under section
418.1 of the Act. It requires the Municipality to exercise the care, skill, diligence
and judgment that a prudent investor would exercise in making such an
investment and the standard does not restrict the securities in which the
Municipality can invest. The Prudent Investor Standard makes use of Modern
Portfolio Theory and applies the standard of prudence to the entire portfolio in
respect of the Municipality’s Long-Term MoneyMNRI rather than to individual
securities. It identifies the fiduciary’s central consideration as the trade-off
between risk and return as found in the CFA Institute Standards of Practice
Handbook.
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4.41. Rebalancing – means the process of realigning the weightings of a portfolio of
assets. Rebalancing involves periodically buying or selling securities in a
portfolio to maintain an original or desired level of asset allocation or risk.
4.34.4.42. Regulation – means Ontario Regulation 438/97.
4.43. Restricted Special Assets – means investments specified by this Policy and
held by the Municipality as of the Prudent Effective Date, where ONE JIB is not
able to exercise control. Restricted Special Assets are listed in Schedule A of
this Policy and are not considered to be MNRI.
4.35.4.44. Risk – means the uncertainty of future investment returns or chance of
loss of capital.
4.36.4.45. Risk Tolerance – means the financial ability and willingness to absorb a
loss in return for greater potential for gains.
4.46. Safekeeping – means the holding of assets (e.g. securities) by a financial
institution.
4.37.4.47. Securities Lending – means loaning a security to another market
participant. The borrower is required to deliver to the lender, as security for the
loan, acceptable collateral with value greater than the value of the securities
loaned. The Securities Lending program is managed by the Custodian or
another appointed agent on behalf of investors. A Securities Lending program
is widely used by institutional investors to generate additional marginal returns
on the total portfolio.
4.38. Short-Term Money – means money that is required immediately by the
Municipality as described in section 5.14 and which remains under the control
and management of the Municipality. The money can be invested in
appropriate Legal List Securities.
4.39.4.48. Sinking Fund – means a fund established to fulfil the requirements to
make annual contributions in respect of various debenture issues wherein
money is to be regularly set aside for the payment of the principal of the
debentures at maturity.
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4.40.4.49. Sinking Fund Required Contributions (Annual Sinking Fund
Requirement) – means the amount of money to be set aside each year for
deposit into a sinking fund or a retirement fund, as applicable, for each sinking
fund and term debenture issue in accordance with the Municipality’s debenture
by-laws.
4.41.4.50. Sinking Fund Required Earnings – means the investment earnings
needed for the Sinking Fund Contributions to continue to grow to a value
sufficient to repay the principal at maturity for each issue of sinking fund and
term debentures.
4.42.4.51. Sinking Fund Excess Earnings – means the investment earnings in
excess of the required earnings.
4.52. Sub-Investment Manager - means an asset management firm or investment
consultant, acting as a sub-investment manager for ONE JIB that provides
investment advice and professional services and is involved in the
implementation and operational aspects of the OCIO Offering, and that has full
responsibility for the investment and management of a Participating
Municipality’s MNRI through ONE Investment, based on an IPS approved by
the Council of the municipality.
4.53. Third-Party Trust Funds – means money over which the Municipality
exercises both management and policy control but whose assets are not
owned by the Municipality. These funds are governed by a variety of
agreements and, in some cases, by legislation. Some funds may have
externally mandated investment policies, and some may have investment
policies that are determined by the Municipality. Third-Party Trust Funds are
listed in Schedule B of this IPS.
4.54. Trust Fund – means a fund which consists of assets that have been conveyed
or assigned to a trustee to be administered as directed by agreement or
statute. As a result, a trustee holds title to the assets for the purpose of
providing benefits, and being accountable, to a beneficiary. The Municipality is
the trustee of funds that are to be used for specific purposes by the
Municipality or any related parties.
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4.43.4.55. Treasurer – means the Deputy CAO, Finance and
Technology/Treasurer, or other individual appointed by Council to fill role of
Treasurer as required by the Municipal Act, 2001
5. Policy Requirements:
General Statements
5.1. Investments of Money Required Immediately (MRI) will, in accordance with this
IPS and Section 418 of the Act, only be made in Legal List Securities.
5.2. Investments of Money Not Required Immediately (MNRI) are governed by the
Prudent Investor Standard in accordance with Section 418.1 of the Act. This
standard is similar to that which governs trustees and pension fund
administrators and creates a fiduciary responsibility. Prudent investment in
compliance with the Act and the Regulation enhances the potential for the
Municipality to earn improved risk-adjusted rates of return.
5.3. Money and investments that the Municipality holds as third-party trust funds or
has an interest in as designated funds will be subject to applicable legislation
and any related agreements or instruments.
5.4.5.3. The Act provides that the Municipality, and therefore ONE JIB, must consider
the following criteria in planning investments of MNRI, in addition to other
criteria relevant to the circumstances:
a) General economic conditions;
b) The possible effect of inflation or deflation;
c) The role that each investment plays within the Municipality’s total portfolio
of investments;
d) The expected total return from income and the appreciation of capital;
and
e) Needs for liquidity, regularity of income and preservation or appreciation
of capital.
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e)5.4. Money and investments that the Municipality holds as Restricted Special
Assets, Third-Party Trust Funds or has an interest in as Designated Funds will
be subject to applicable legislation and any related agreements or instruments.
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5.5. Use of Prudent Investor Standard
5.5.1. For MNRI, the standard to be used by the Municipality and ONE JIB shall be
the Prudent Investor Standard as required by section 418.1 of the Act and Part
II of the Regulation in the context of managing the Municipality’s MNRI and
investments thereof. Investments shall be made with the care, skill, diligence,
and judgment, taking into account the prevailing circumstances, that persons of
prudence, discretion and integrity would exercise in the management of
investments, considering the necessity of preserving capital as well as the
need for income and appreciation of capital. The Act includes a duty to obtain
the advice that a prudent investor would obtain under comparable
circumstances.
5.5.2. Officers, employees and investment agents acting in accordance with written
procedures and the IPS and exercising due diligence shall take all necessary
actions to optimize performance of investments on a portfolio basis, taking in to
account the prescribed risk and other parameters set out in this IPS and
market factors. The Municipality’s staff acting in accordance with written
procedures and this IPS, shall be relieved of personal responsibility for an
investment’s performance, provided underperformance relative to expectations
is reported to Council and the liquidation or sale of investments is carried out in
accordance with this IPS.
Determination of Money Required Immediately and Money Not Required
Immediately
5.6. Determination of the Municipality’s MNRI is the responsibility of Council. In
making the determination, Council may consider:
5.6.1. the time horizon within which the monies are needed to meet financial
obligations;
5.6.2. the purpose for which the monies have been collected or set aside and are to
be used;
5.6.3. the source of the money; or
5.6.4. any combination of the foregoing
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5.7. There is no legislated definition of MRI or MNRI and no guidance is provided..
The municipality has the responsibility to define the basis of MNRI in a way
that is most appropriate for their circumstances.
5.8. The Municipality defines MNRI as funds that are, in the opinion of the
Treasurer, not required within the next 36 month period.
5.9. For certainty, all money and investments of the Municipality that have not been
identified as MNRI (other than Restricted Special Assets, Third-party Trusts
Funds and any Designated Funds third-party trust funds and any designated
funds referenced in Section 1.15.3) shall be deemed for purposes of this IPS to
5.10. Determination of the Municipality’s MNRI and MRI may be modified at any time
and from time to time by action of Council and with respect to specific money
by the Treasurer in accordance with the provisions of Section 1.1.15.37.
5.11. Any changes in this IPS regarding the Municipality’s MNRI and MRI must be
communicated immediately in writing to ONE JIB.
5.12. The Municipality’s portfolios represent funds required for specific purposes. A
high-level description of each of these portfolios and their objectives is
provided in Section 5.17 below. This IPS applies to the following money of the
Municipality, its agencies, boards and commissions including:
5.12.1. MRI which is invested in Legal List Securities; and/or,
5.12.2. MNRI which is invested under the Prudent Investor Standard.
Investment
5.13. The Municipality’s MRI is described in this IPS as Short-Term Money. Short-
Term Money consists of money that is needed to meet the short-term financial
obligations of the Municipality and are controlled and managed by the Deputy
CAO/Treasurer, Finance and Technology Treasurer or designate.
5.14. Short-Term MoneyMoney Required Immediately: Investment Objectives
5.14.1. The main focus of the investment of Short-Term MoneyMRI is cash
management, and the interest income generated by the investment of these
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monies contribute to municipal revenues. To the extent possible, the
Municipality shall attempt to match its investments with anticipated obligations.
5.14.2. Capital preservation is the paramount objective for short-termMRI investments,
and these investments need to be highly liquid. Consequently, only high-
quality, short-term investments that are also Legal List Securities will be held in
this portfolio. The Municipality may invest in fully liquid money market
securities and deposit accounts. The Municipality aims to maximize returns
subject to the constraints set out in Part I of the Regulation, as amended from
time to time, with a view to preserving capital and to further manage risk
through diversification by issuer and credit quality.
5.14.3. The investment objectives for short term moneyMRI, ranked in priority, are as
follows:
a) Security of Principal
The primary objective for MRI is to ensure the security of principal. To minimize
the risk of loss, investments shall be subject to minimum credit ratings and
shall be diversified by maturity, type of investment and issuer. Investing
activities will be reviewed on a regular basis as actual, revised and forecasted
operating and capital plans are completed. Maturity dates should be structured
so that investment cash inflows occur when needed.
b) Liquidity Requirements
Liquidity is measured by the ease with which securities can be converted to
cash to meet forecast spending. The investments that are eligible under
Ontario’s Eligible Investments and Related Financial Agreements Regulation
possess different features and thus market prices will vary depending on
market conditions, as well as the particular features of the type of investment.
To ensure adequate liquidity, the Municipality’s investments shall be diversified
by holding securities of various terms to maturity and by various types of
investments and issuers and to the extent possible, the term of such
investments shall match the forecasted requirements for such monies to meet
expenditures.
c) Rate of Return
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The Municipality’s money shall be invested to maximize the rate of return
within acceptable risk levels while respecting the security of principal, legal
constraints and the liquidity needs of each investment portfolio.
The composition of each portfolio, including its term to maturity and type of
investments, shall be adjusted within the guidelines of this Policy to take
advantage of market opportunities. Such changes shall be made with the
periodic interest rate outlook and target portfolio structure approved by the
Treasurer.
5.15. Short-Term MoneyMRI: Eligible Investments
5.15.1. Short Term MoneyMRI may be invested in high quality, short-term investments
that are also Legal List Securities available from banks, dealers and other
financial institutions. Investments issued or guaranteed by approved
institutions will be permitted by this Policy, as deemed eligible by Ontario
Regulation 438/97 or as authorized by subsequent provincial regulations.
Investments will be limited to securities issues maintaining a minimum credit
rating by an appropriate credit rating agency.
5.15.2. The Municipality’s existing Investment Policy CP-003, which is referred to in
Part I of the Regulation as a statement of investment policies and goals, is
attached as Appendix III and will apply to its Short-Term MoneyMRI.
Necessary modifications will apply and in the event of a conflict between this
IPS and the attached investment policy in respect of the Short-Term
FundsMRI, the provisions of the CP-003 Investment Policy (Legal List) will
prevail.
5.16. MNRI: Long-Term Money
5.16.1. The Municipality’s MNRI is described in Section 5.8 as Long-Term money. In
ONE JIB Agreement and this IPS, ONE JIB has exclusive control and
management of the Long-Term MoneyMNRI and the investments made
therewith.
5.16.2. From time to time, the Municipality may require money immediately to meet
financial obligations and may require ONE JIB to liquidate one or more
investments in order to generate money to meet those obligations. ONE JIB
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will select the investment(s) to be liquidated. The timing of such liquidation will
be determined by ONE JIB in consultation with the Treasurer.
5.17. Long-Term MoneyMNRI: Investment Objectives
5.17.1. In setting the objectives noted below, the Municipality has taken into account
the following considerations:
a) Preservation of capital;
b) Adequate liquidity that takes into account the needs of financial
obligations and reasonably anticipated budgetary requirements;
c) Diversification by asset class, market, sector, issuer, credit quality and
term to maturity;
d) Income and capital appreciation; and,
e) Macro risks, such as inflation, economic growth and interest rates.
5.17.2. Investment of long-term moneyMNRI is to be managed by ONE JIB in a way
that balances the investment objectives, expected returns and risk, to develop
asset allocations that achieve the Municipality’s financial needs with stated risk
tolerances.
5.17.3. The investment objectives for MNRI are as follows:
MNRI Horizon Objective Risk Tolerance
Investment
Horizon
Short Term Preservation of
Capital
Low Risk 3-4 years
Medium Term Contributions
towards capital
projects, mitigating
inflation impacts
and meeting target
Moderate Risk 5-10 years
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MNRI Horizon Objective Risk Tolerance
Investment
Horizon
funding
requirements
Long Term Contributions
towards capital
projects, mitigating
and meeting target
funding
requirements.
Emphasis on long
term inflation
adjusted growth
Moderate to
Moderate High
Risk
> 10 Years
5.17.4. The MNRI invested with ONE JIB will be broadly diversified to help reduce the
volatility of investment returns. Returns have an impact on revenues, as well
as a longer-term impact on future years’ budgets and should, at a minimum,
keep pace with inflation. To the extent possible, the Long-Term Money’sMNRI
investment horizons are aligned with the Municipality’s obligations and cash
flow requirements and may consist of liquid and non-liquid securities based on
future cash flow requirements.
5.18. Long-Term MoneyMNRI: Eligible Investments
5.18.1. Eligible investments for Long-Term MoneyMNRI include any Pooled Fund or
other collective investment vehicle or institutional investment management
product that is part of the OCIO Offering for the Prudent Investment Program
(Prudent Investment Offering)approved or selected by ONE Investment for the
Prudent Investment Program (OCIO Offering), provided always that the
products and the selection of products comply in all material respects with the
IPS.
5.18.2. Additionally, nothing in this IPS prevents Long-Term MoneyMNRI from being
held in cash, short-term money market instruments, or overnight deposits.
5.19. Long-Term MoneyMNRI: Sinking Funds
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5.19.1. There are no provisions applicable for sinking funds.Sinking Funds are
currently not applicable to the Municipality, however, should any sinking funds
be established in the future, they are to be classified as MNRI and will be
managed separately by ONE JIB.
5.20. Long-Term Money: Local Distribution Corporation (LDC) Securities
5.20.1. The direct investment in LDC shares and/or promissory notes, as may be
applicable, prior to the Prudent Effective Date, shall be permitted and included
as part of the Long-Term Money/MNRI held by ONE JIB. Specific details of this
investment shall be approved by Council in its sole and absolute discretion,
and ONE JIB shall adhere to all terms and conditions as directed by the
Municipality. More specifically, ONE JIB shall be prohibited from selling,
transferring, assigning, or pledging the LDC shares. The direct investment in
LDC shares and promissory notes, as listed in Schedule A, shall be consider ed
Restricted Special Assets and shall not be held by ONE JIB as MNRI.
5.20.2. LDC shares are considered restricted, special assets and remain in the
custody of the Municipality. LDC shares are to be viewed as separate
standalone investments with the subject matter expertise and administrative
functions remaining under the purview of the Municipality of Clarington. Council
retains direct, de facto control of the LDC shares and ONE JIB shall adhere to
all terms and conditions as directed. More specifically, Council controls all
acquisition and disposition decisions related to current and future LDC assets.
Any voting related to LDC shares will be undertaken solely by the Municipality.
5.20.3. The investment in LDC shares will not be included in calculations regarding
asset mix/allocations or other constraints that apply to the Long-Term Money.
5.20.4.5.20.2. The investment in Elexicon Corporation is considered to be an
investment in an LDC for the purposes of this policy as it is the sole
shareholder of Elexicon Energy which is an LDC.
5.21. Restricted Special Assets
5.21.1. For certainty, Restricted Special Assets are not MNRI of the Municipality, and
such assets are not under the control or management of ONE JIB.
5.21.5.22. Third-Party Trust Funds and Designated Funds
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5.21.1.5.22.1. ln addition to the Municipality's own money, the Municipality is
from time to time entrusted with third-party trust funds, and the Municipality's
responsibilities and obligations with respect thereto may be subject to other
legislation and governed by other agreements and instruments. To the extent
that there is any conflict or inconsistency between the provisions of this IPS
and the terms and conditions contained in such other legislation, agreements
or instruments applicable to third-party trust funds, the latter shall prevail.
5.21.2.5.22.2. The Municipality's third-party trust funds and the designated funds
are listed in Schedule AB.
5.21.3.5.22.3. For certainty, the third-party trust funds and the designated funds
are not MNRI of the Municipality, and such monies are not under the control or
management of ONE JIB.
Investment Management
5.22.5.23. Investment Management of Short-Term MoneyMRI
5.22.1.5.23.1. The investment of Short-Term FundsMRI shall be controlled and
managed by the Treasurer.
5.23.5.24. Investment Management of Long-Term MoneyMNRI
5.23.1.5.24.1. The investment of Long-Term MoneyMNRI shall be controlled and
managed by ONE JIB in accordance with this IPS and the ONE JIB
Agreement.
5.23.2.5.24.2. An Outsourced Chief Investment Officer (“OCIO”) and/or External
Portfolio Managers shall be appointed by ONE JIB, and they shall each enter into
an agreement with ONE Investment that complies with this IPS and Part II of the
Regulation and provide for delivery of compliance and performance reports. In
accordance with the applicable regulatory requirements, ONE JIB shall make any
OCIO and/or External Portfolio Managers changes deemed in the best interest of
the participating municipalities. ONE Investment shall agree on a set of
operational guidelines including constraints, discretion limits, diversification and
quality standards, and performance expectations, which are documented in the
OCIO’s and/or External Portfolio Managers’ guidelines.The selected Sub-
Investment Manager shall enter into agreement with ONE Investment related to
the OCIO Offering, that complies with this IPS and Part II of the Regulation and
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will provide compliance and performance reports to ONE JIB and ONE
Investment. ONE JIB shall make any investment management changes deemed in
the best interest of the Municipality.
5.24.5.25. Transition to Prudent Investor Regime
5.24.1.5.25.1. Until the Prudent Effective Date, the Municipality will continue to
control and manage its MRI, MNRI and investments in Legal List Securiti es.
Some Legal List investments were made with MRI and some with MNRI.
5.24.2.5.25.2. Upon and after the Prudent Effective Date, the control and
management of money and investments that are determined to be not required
immediately shall be given to ONE JIB. Nothing in this IPS requires that such
investments need be liquidated or disposed of. It is not contrary to this IPS for
investments that the Municipality does not require immediately to be held, and
to continue to be held by, ONE JIB in instruments such as term deposits,
guaranteed investment certificates or principal protected notes issued by a
financial institution. They can be held to maturity and invested upon receipt of
cash proceeds.
5.25.3. During the transition to the OCIO Offering the Chair and Vice-Chair of ONE JIB
have discretionary power to approve temporary investments recommended by
the Sub-Investment Manager that may not be expressly described in this IPS
but are, in the opinion of the Chair and Vice-Chair, in the best interests of the
Municipality and are entirely consistent with their fiduciary obligations to the
Municipality.
5.24.3.5.25.4. Management of third-party trust funds and any designated funds is
not directly affected by the Prudent Effective Date.All MNRI that is not Third-
Party Trust Funds, Designated Funds or Restricted Special Assets shall be
provided to the ONE JIB on the Prudent Effective Date.
Investment Constraints
5.25.5.26. Environmental, Social and Governance (ESG) Investing
5.25.1.5.26.1. The Municipality supports ESG investing for Short-TermMRI and
Long-Term MoneyMNRI. The Municipality believes that well-managed
companies are those that demonstrate high ethical and environmental
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standards and respect for their employees, human rights, and the communities
in which they do business, and that these actions contribute to long term
financial performance.
5.25.2.5.26.2. The Municipality has chosen to monitor the developments of ESG
factors and will reconsider its approach to ESG investing for the Short-Term
MRI Investment Portfolio as and when appropriate to do so.
5.25.3.5.26.3. For the investment of Long-Term Money, ONE JIB is required to
explore how External Portfolio Managers are implementing responsible
investing principles at the time of hiring and during periodic reviews. It may
report on results periodically, if requestedFor the Investment of MNRI, ONE JIB
is required to explore and consider how the OCIO is implementing responsible
investing principles at the time of hiring and during periodic reviews. It may
report on results periodically, if requested.
5.26.5.27. Securities Lending
5.26.1.5.27.1. For the investment of Short-Term MoneyMRI, Securities Lending is
not permitted.
5.26.2.5.27.2. For the investment of Long-Term MoneyMNRI, the Municipality
may invest in pooled funds, and other investment funds that are managed by
an External Portfolio Manager who may engage in Securities Lending if the
policies of the External Portfolio Manager permit such an actionfunds that are
managed by the Sub Investment Manager who may engage in Securities
Lending if the policies of the OCIO permit such an action.
5.27.5.28. Derivatives
5.28.1. Derivatives may not be used for speculative purposes. They may be used for
the investment of Long-Term Money where they are fully covered by a backing
asset, e.g., as for currency or other hedging, to change portfolio duration or in
covered call strategies.For the investment of MNRI, futures and forwards
contracts, options and other derivative instruments may only be used to:
a) create an asset mix position that does not leverage the portfolio,
b) replicate the performance of a capital market index, or
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5.27.1.c) reduce risk as part of a hedging strategy
5.28.5.29. Use of Leverage
5.28.1.5.29.1. Nothing in this IPS prevents the use of leverage, provided it is
prudent to do so. Leverage is inherent in the use of certain types of investment
strategies and instruments. Where leverage is employed, ONE JIB (for MNRI)
and the Treasurer (for MRI) shall have in place monitoring procedures to
manage overall exposure to any counterparty Leverage is not a strategy
currently employed by ONE JIB but may be considered at a later
date.Leverage should not be exercised for speculative purposes but may be
used as a hedging tool.
5.29.5.30. Pooled Funds
5.29.1.5.30.1. All investment strategies may be pursued directly through holdings
of corporate and government issuers and indirectly via pooled funds and
investment funds or any combination thereof. The investment strategies may
also include allocations to cash or short-term investment vehicles.Investments
in open-ended pooled funds, closed-ended pooled funds, limited partnerships
and other specialist corporate structures (e.g. LLCs), are permitted provided
that the assets of such funds are permissible investments under this IPS or
provided that any non-permitted investments are disclosed by the Sub-
Investment Manager. Within pooled funds, the External Portfolio Manager’s
policies will take precedence over this IPS.
5.30.5.31. Currency Hedging
5.30.1.5.31.1. The Short-Term PortfolioMRI Investment Portfolio may consider
the utilization of currency hedging only in cases where the Municipality can
allocate the hedge to a specific capital purchase denominated in a foreign
currency.
5.30.2.5.31.2. The Municipality’s funding requirements are in Canadian dollars.
However, some exposure to foreign currencies in the Long-TermMNRI
Investment Portfolio may be advantageous to provide diversification and
potentially enhance returns. Therefore, it shall not be a violation of this IPS for
investments in global mandates to be unhedged, in whole or in part, where the
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diversification benefits embedded in the currency exposure are considered to
be beneficial or desirable by ONE JIB.
5.32. Alternative Asset Classes
5.32.1. The applicable legislation does not prevent the direct or indirect placement of
the MNRI in Alternative Assets Classes, this IPS permits investments in
alternative investments for the purpose of management of MNRI under ONE
JIB.
5.32.2. Alternative Asset Classes, such as infrastructure or real estate, may have
uncorrelated return characteristics with traditional Asset Classes that may
improve diversification within the portfolio, which may lead to better risk
adjusted returns. Typically investment may not be fully liquid, and are only
appropriate for inclusion in portfolios with long investment horizons.
5.31.5.33. Prohibited Investments
5.31.1.5.33.1. There are no investments specifically listed as prohibited.
5.32.5.34. Performance Monitoring, Rebalancing and Management
5.32.1.5.34.1. Short-Term MoneyMRI
5.32.2.5.34.2. Reporting of Short-Term MoneyMRI shall be in accordance with
policy CP-003 Investment Policy (Legal List).
5.32.3.5.34.3. Long-Term MoneyMNRI
5.32.4.5.34.4. For the investment of Long-Term MoneyMNRI, ONE JIB shall
establish parameters for monitoring investments and rebalancing through
policy or directly within the Iinvestment Pplan.
5.32.5.5.34.5. Investments are expected to achieve returns at least equal to their
benchmarks measured over a rolling five-year period. At minimum, ONE JIB
shall provide reporting described in Section 5.415.42 6.7 that shows the
holdings, declares compliance with this IPS, and shows External Portfolio
Manager performancereports on the Sub-Investment Manager’s performance.
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Administrative Policies
5.33.5.35. Flow of Money and Annual Municipal Budget
5.33.1.5.35.1. On an annual basis, as part of the Municipality’s Annual Review
process, the Municipality shall identify the amount, if any, of Long-Term
MoneyMNRI that it holds. Any Long-Term MoneyMNRI not already under the
control and management of ONE JIB shall be transferred to ONE JIB as soon
as practicable.
5.33.2.5.35.2. On an annual basis, ONE JIB shall be notified by the Treasurer as
to the amount, if any, required by the Municipality from the Long-Term
MoneyMNRI then under the control and management of ONE JIB for the
Municipality’s operational purposes. Such amount shall be deemed to be
Short-Term MoneyMRI and shall be returned to the Municipality in a lump sum
or by way of periodic payments, as directed by the Treasurer.
5.34.5.36. Flow of Money Otherwise than through the Budget Process
5.34.1.5.36.1. The Short-Term FundsMRI captures revenues received by the
Municipality during each year after the approval of the Municipality’s budget for
the year. Any amounts deemed to be MNRI by the Treasurer at any such time
during the year shall be transferred to ONE JIB to be under its management
and control as Long-Term FundsMNRI. Amounts so transferred will be
recorded annually in the Investment Plan and allocated by ONE JIB in
accordance with the Investment Plan.
5.35. Contingencies
5.35.1.5.36.2. The Treasurer is authorized to direct ONE JIB to return any
amounts determined by the Treasurer to be required to meet expenditures for
unexpected contingencies not anticipated by the Municipality’s budget in force
for that year, provided however that the aggregate of the amounts to be
returned to the Municipality under this Section 6.2.2 during the year shall not
exceed 25% of the Long-Term MoneyMNRI under the control and
management of ONE JIB as at the date that the Municipality approved its
budget for the year (the Budgeted Long-Term MoneyMNRI). In determining the
Budgeted Long-Term MoneyMNRI for purposes of calculating the 25% limit,
any Long-Term MoneyMNRI to be transferred to the control and management
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of ONE JIB in accordance with that year’s Annual Review pursuant to Section
5.42.25.41.2 shall be included and any amount to be returned by ONE JIB to
the Municipality pursuant to Section 6.1.2 shall be excluded.
5.36.5.37. Valuation of Investments
5.36.1.5.37.1. Investments shall be valued according to the values provided by
the Custodian(s). For the investment of Long-Term MoneyMNRI, values of
unitized vehicles shall be valued according to the unit values published by the
Custodian. Other investments shall be valued at their market value when that
is available from regular public trading. If a market valuation of an investment is
not available, then a fair value shall be supplied by the External Portfolio
Managerthe Sub-Investment Manager to the CustodianONE Investment no
less frequently than quarterly.
5.37.5.38. Voting Rights
5.37.1.5.38.1. Subject to the provisions of Section 5.2.4 with respect to LDC
securities, where External Portfolio Managers have been appointed, such
External Portfolio Managers shall assume the responsibility of exercising voting
rights and will report their voting policies to ONE JIB annually. The Municipality
may access these policies at any time.The Sub-Investment Manager shall
assume the responsibility of exercising voting rights in respect of the
Municipality’s MNRI and will report its voting policies to the ONE JIB annually.
The Municipality may access these policies at any time.
5.38.5.39. Internal Controls
5.38.1.5.39.1. The Treasurer shall establish an annual process of review of all
investments made under this IPS. This review will provide internal control by
assuring compliance with governing legislation and with policies and
procedures established by the Treasurer. To the extent ONE JIB’s input is
needed, these requirements will be communicated in advance to ONE JIB.
5.39.5.40. Custodians
5.39.1.5.40.1. All investments and assets of the investment portfolios shall be
held by a Custodian and any of the Custodian's sub-custodians or nominees.
For Long-Term MoneyMNRI, the Custodian shall be acceptable to ONE
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Investment. For Short-Term MoneyMRI the Custodian shall be acceptable to
ONE Investment if ONE Investment products are being used for the investment
of the Municipality’s Short-Term MoneyMRI, otherwise the Custodian shall be
acceptable to the Municipality.
5.40.5.41. Reporting
5.40.1.5.41.1. For the investment of Short-Term Money (MRI)MRI, the Treasurer
shall report at least annually to Council, the report to be in a form and contain
such content as Council may request. Subject to any reporting obligations
contained in the Municipality’s Investment Policy (Legal List) the report to
Council shall include investment performance during the period covered and
any other information required under the Regulation and that the Treasurer
may consider to be pertinent.
5.40.2.5.41.2. The Regulation provides that ONE JIB shall submit an investment
report to Council in respect of the investment of Long-Term Money (MNRI)of
MNRI at least annually. This report shall include the following.
a) Investment performance during the period covered by the report;
b) Asset mix of the total portfolio;
c) A listing of individual investments held at the fund level at the end of the
reporting period showing, where appropriate, book value, market value,
realized/unrealized gains/losses and actual income received;
d) A list of all transactions including the security name, trade date, and the
purchase and/or sale price;
e) A statement by the Treasurer as to whether all investments were made in
accordance with the IPS and as to whether all investments were made in
accordance with the Investment Plan; and
f) Any other pertinent information in the opinion of the Treasurer.
5.40.3.5.41.3. All securities invested on behalf of the Municipality by ONE JIB or
with the assistance of ONE Investment shall be held for safekeeping in the
name of the Municipality by a Custodian.
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5.41.5.42. Approval, Subsequent Modifications and Effective Date
5.41.1.5.42.1. Policy CP-003 Investment Policy shall be renamed CP-003
Investment Policy (Legal List) and will be reviewed on an annual basis.
5.41.2.5.42.2. At least annually, Council shall review the IPS and update it, if
required. In the course of reviewing the IPS, Council may request comments
from the Treasurer with respect to the investment of Short-Term MoneyMRI
and from ONE JIB with respect to the investment of Long-Term MoneyMNRI.
5.41.3.5.42.3. Following the Council’s review of the IPS, ONE JIB shall review
the Investment Plan and update it, if required.
5.41.4.5.42.4. At a minimum, the annual IPS review will consider:
a) the adequacy of funding for capital works;
b) the Municipality’s ability to reduce other spending;
c) flexibility of the timeframe to payout; and
d) sensitivity to loss.
5.42.5.43. Effective Date
5.42.1.5.43.1. This IPS is adopted by Council of the Municipality, and will come
into force effective the date of the Prudent Effective Date Agreement as signed
by ONE JIB and the Municipality.. The Treasurer is directed to sign a copy of
this IPS to evidence approval and to deliver a copy of this IPS to ONE JIB.
6. Roles and Responsibilities:
6.1. Council is responsible for:
6.1.1. Approving the Municipality’s Investment Policy and reviewing the policy on an
annual basis.
6.2. Chief Administrative Officer (CAO) is responsible for:
6.2.1. Ensuring compliance with this policy
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6.3. Deputy CAO, Finance and Technology/Treasurer is responsible for:
6.3.1. This IPS is approved and adopted by Council with input from the Treasurer,
and from ONE JIB with respect to MNRI. MRI of the Municipality, and anyin
addition to any third-party trust fundsThird-Party Trust Funds, Designated
Funds and Restricted Special Assets referenced in Section 1.15.3, remain
the control and management of the Treasurer.
6.3.2. Consistent with this IPS, the Treasurer is responsible for the implementation of
the investment program and the establishment of investment procedures which
shall include:
a) Investment management of MRI and any third-party trust fundsThird-
Party Trust Funds, Designated Funds, and Restricted Special Assets
referenced in Section 1.15.95.9 by, or under the direction of, the
b) The deposit or withdrawal of MNRI, under the explicit delegation of
authority regarding MNRI, and the investment thereof, to ONE JIB, which
is responsible for the control and management of such funds and
investments; and,
c) A system of controls exercised by the Treasurer to regulate the activities
of employees.
6.3.3. No person including, without limitation, ONE JIB, may engage in an investment
transaction except as provided under the terms of this IPS.
6.3.4. In the management of MRI of the Municipality, and any third-party trust
fundsThird-Party Trust Funds, Designated Funds and Restricted Special
Assets referenced in Section 2.1, the Treasurer may engage one or more
agents and service providers. ONE Investment can assist with the investment
of the Municipality’s MRI, in Legal List Securities, and with the investment of
third-party trust funds, in accordance with the terms of the applicable trust, if
permitted, at the request of the Municipality.
6.4. ONE JIB is responsible for:
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6.4.1. ONE JIB has been appointed by the Municipality in accordance with the
requirements of the Act and the Regulation and on the terms and conditions
set out in the ONE JIB Agreement (Appendix I).
6.4.2. ONE JIB exercises control and management of the Municipality’s MNRI and
the investments made by it in accordance with the objectives and risk tolerance
established in this IPS.
6.4.3. Among the responsibilities of ONE JIB are the following:
a) Reviewing this IPS;
b) Adopting and maintaining an Investment Plan that complies with this IPS;
c) Engaging External Portfolio Managers, Custodians, administrators and
other investment professionals (Agents);
d) Allocating the money and investments under its control and management
among External Portfolio Managers and their funds in compliance with
this IPS;
e) Monitoring the performance of the OCIO Offering and Agents; and,
f) Reporting to the Municipality.
6.4.4. The foregoing is subject to the more detailed terms and conditions contained in
the ONE JIB Agreement.
6.4.5. ONE JIB, in its capacity as a joint municipal service board, in addition to being
a local board of each member Municipality is subject to a Code of Conduct as
required by the Municipal Act, 2001 (the “Act”). This Code of Conduct appl ies
to the Chair and the other Members of ONE JIB acting in their capacity as
Members of ONE JIB.
6.5. All Staff are responsible for:
6.5.1. Individuals who are responsible for the Municipality’s Short-TermMRI
Investment Portfolio shall comply with the Municipality’s Conflict of Interest
guidelines and any relevant professional codes of conduct (e.g., the CPA Code
of Professional Conduct).
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7. Related Documents:
7.1. CP-003 Investment Policy (Legal List)
7.2. O.Reg.438/97: Eligible Investments, Related Financial Agreements and
Prudent Investment
8. Inquiries:
8.1. Manager, Financial Planning/Deputy Treasurer
8.2. Deputy CAO, Finance and Technology/Treasurer
9. Revision History:
Date Description of Changes Approved By
April 22, 2024 Updated Policy name Council
April 22, 2024 Prudent Investment adoption Council
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May xx, 2025 Annual update to investment
policy.
References to portfolio
manager have been
changed to Sub-Investment
Manager to reflect change
to OCIO.
References to short-term or
long-term money changed
to MRI or MNRI
Definitions added or
removed.
New section on restricted
special assets and
corresponding amendments
to LDC investment.
Added Appendix 1 and 2
Council
Formatted: List Paragraph, Bulleted + Level: 1 + Aligned at:
0.25" + Indent at: 0.5"
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Schedule A
Restricted Special Assets
Debt Securities
None
Own-Debt Securities
Not applicable
LDC or other MSC Securities
Investments in Elexicon Corporation, Elexicon Energy or Elexicon Group
Other
None
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Schedule B
Third-Party Trust Funds and Designated Funds
Third-Party Trust Funds
Care and Maintenance trust funds under the Funeral, Burial and Cremation Services
Act, 2002.
Designated Funds
Not Applicable