Councillors in Wellington North Township intend to make use of the One Investment Program to get a better return on investments of surplus township cash.
On Monday night, councillors reviewed a report from Treasurer John Jeffery that outlined the background of the One program.
He noted that beginning in 1992, with amendments to the Municipal Act, Ontario municipalities have been permitted to participate in joint municipal investment strategies.
In turn, that allowed municipalities to pool investments, providing the opportunity to earn higher returns through access to larger, diversified, high-quality investment portfolios.
A subsidiary of the Association of Municipalities of Ontario) and the Chums Financing Corporation (a subsidiary of the Municipal Finance Officers’ Association of Ontario) both established investment pools in response to those amendments.
In 1995, Chums combined its efforts to create a single, professionally-managed investment program known as One – The Public Sector Group of Funds. One historically offered a money market portfolio and a bond portfolio, but an equity portfolio was added as well as a corporate bond portfolio
In February 2010 the program was renamed The One Investment Program. It has continued to grow in recent years and now also welcomes investment from organizations within the broader Ontario public sector.
Jeffery said local government investment pools are not a new idea, with many having been established in jurisdictions across Canada. They have proven to be highly successful and popular investment and cash management tools.
He said he had alluded to the idea in the previous council discussion of the finance committee. He explained that in January, the finance committee discussed the program to consider participating in – through the Association of Municipalities of Ontario – “to get a little bit better return on our surplus cash from time to time.”
Jeffery said that is an option available through AMO which will do that.
“We’re not going to make tons of money necessarily, or hugely different rates of return. But certainly even one percentage point would be significant to our budgets and the health of our reserve funds as well.”
Jeffery said all the investments entered into “are acceptable investments for municipalities as outline in the Municipal Act.”
He noted the agenda had a bylaw to authorize the municipality to enter into such an arrangement.
Mayor Ray Tout asked if there is a way of knowing how much of an increase there might be on the rate of return. He asked if it is more than what the municipality gets now.
Jeffery said it depends on the type of investment.
The amount of return depends on the degree of risk.
Even so, the rates of returns are relatively conservative.
Investments in the corporate sector would be greater, but more diversified.
In that area, Jeffery said, “The returns could be quite substantial … but relatively conservative compared to fly-by-night penny stocks we might engage in at home.”
Tout said if the municipality can increase its return, that “is as invaluable an asset as reducing debt or expenses for the well-being for the municipality.”
Council later passed the bylaw allowing the township to become involved in the investment program.
