The San Diego County Investment Pool is a local government money fund
which ranges in size from $10.2 - $15.9 billion in assets on an annual
basis. Originally created in 1853 by the County Board of Supervisors,
the pool now invests the assets of the County, 42 K-12 school
districts, 5 community colleges and over 160 other public agencies in
the region.
Pool assets have nearly tripled during the past 15 years due to
rising tax collections, the addition of new participants, and
increased bond proceeds.
The three primary objectives of the Investment Pool are to:
- Safeguard the principal
of the invested funds
- Meet the liquidity needs of Pool
participants
- Achieve an investment return within the
parameters of prudent risk management
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A: The Pool is comprised of monies deposited by mandatory and
voluntary participants. Mandatory participants include the County of
San Diego, K-12 school districts, community college districts and fire
districts. In addition to investment management, the Treasurer’s
Office provides banking services to mandatory Pool participants.
Voluntary participants are those agencies that are not required to
invest their monies in the County Pool and do so only as an investment
option. Voluntary participants include cities and various special
districts. We encourage voluntary participants to use the pool as a
long-term investment vehicle.
Our office ensures that all proposed withdrawals and deposits by
voluntary participants will not adversely affect the interests of the
other depositors.
A: The Treasurer invests the Pool monies in accordance with
conservative standards set forth by the California Government Code and
the County Investment Policy. The Policy focuses on risk management by
setting limits on principal exposure and guidelines for liquidity.
The County does not invest in any securities that receive lower than
an A rating.
A: In accordance with State law, the authority to manage the County
Pool assets is delegated to the County Treasurer’s Office. The Pool’s
full-time, in-house investment team reports directly to the County
Treasurer. A nine-member Oversight Committee, comprised of County
officials, school district officials, a special district official and
up to five public members, meets regularly to review the Pool’s
investment strategy. In addition, the County Investment Policy is
reviewed and approved annually by the Oversight Committee and then
approved by the County Board of Supervisors.
A: Since 1999, the Pool has achieved the highest rating of AAAf from
a nationally recognized, independent credit rating agency. This
reflects the highest possible underlying credit quality of the Pool’s
investments. Fitch Ratings also assigns the Pool an S1 rating for
market sensitivity, indicating very low sensitivity to changes in
credit spreads and interest rates.
A: As mandated by State law, the County Pool limits investments to
fixed-income securities. Therefore, the Pool is prohibited from
investing in equities (stocks), index funds, and any of the following:
derivative notes, inverse floaters, range notes, interest-only strips
derived from a pool of mortgages, and any security that could result
in zero interest accrual. The Pool’s exposure to credit risk is
lessened by internal credit review and monitoring, diligent compliance
with established credit guidelines, and by limiting the allocation to
certain types of securities.
To meet the liquidity needs of the Pool participants, 15% of the
portfolio must mature within 90 days and a minimum of 35% must mature
within one year. The effects of interest rate risk are managed by
limiting the Pool’s maximum duration and implementing a “buy-and-hold”
investment strategy. By employing this strategy, the Pool is able to
avoid realized losses resulting from a rise in interest rates.
A: Joining the Pool as a Voluntary Participant is a simple process.
Any government agency located within San Diego County can make a
deposit after signing an Investment Management Agreement, providing a
resolution from its governing body authorizing the investment, and
setting up the necessary accounts in the County’s system. After that,
deposits and withdrawals can be placed daily and fulfilled via
electronic funds transfer.
