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4.0 OBJECTIVES <br /> The primary objectives, in priority order, for the City of Santa Ana's investment activities <br /> shall be Safety, Liquidity, and Yield: <br /> 4.1 Safety of Principal <br /> Safety of principal is the foremost objective of the City of Santa Ana, care must <br /> be taken to ensure the preservation of capital and the protection of principal. <br /> Each investment transaction shall be undertaken in a manner that seeks to <br /> ensure preservation of capital in the overall portfolio. The objective will be to <br /> mitigate credit risk and interest rate risk by following guideline listed below. <br /> A. Credit Risk <br /> Credit Risk is the risk of loss due to the failure of the security issuer or <br /> backer to redeem the outstanding debt at the stated maturity date. Credit <br /> risk also applies to the overall market perception of the financial strength <br /> and capacity of the issuer. The City of Santa Ana will minimize credit risk <br /> by: <br /> i. Limiting investments to authorized investments as set forth in <br /> Section 10.0 of this investment policy; <br /> ii. Pre-qualifying the financial institutions, broker-dealers, <br /> intermediaries, and advisors with which the City will do business; <br /> iii. Diversifying the investment portfolio so that potential losses on <br /> individual securities will be minimized. <br /> iv. Holding a minimum percentage of the total portfolio in highly <br /> marketable short-term treasuries, checking with interest, <br /> government pooled account, or a combination of all three. The <br /> minimum percentage shall be set monthly by the FMSA Investment <br /> Advisory Committee based on a rolling twenty-four month analysis <br /> of the City's minimum cash position requirements adjusted for any <br /> exceptional anticipated cash out flows. <br /> B. Market or Interest Rafe Risk <br /> Market or interest rate risk is the risk that the market value of securities <br /> in the portfolio may fall due to changes in general interest rates. The <br /> City of Santa Ana will minimize interest market interest rates, by: <br /> i. Structuring the investment portfolio so that securities mature <br /> to meet cash requirements for ongoing operations, thereby <br /> avoiding the need to sell securities on the open market prior to <br /> maturity, and <br /> ii. Purchasing investments with the intent to hold until maturity; <br /> and <br /> Resolution No. 2025-019 <br /> Page 7 of 24 <br />