Executive summary
- The City engages in investment activity in accordance with the Ontario Municipal Act 2001 S. 418-420 as well as in accordance with the City’s approved Investment Policy. While the Municipal Act sets out eligible investments, the City’s policy sets out guiding principles for the overall investment strategy. The policy serves as a guide to the planning and implementation of the City’s investment program.
- The City’s long-term investments consist of primarily bonds issued by the Federal, Provincial, Regional and Municipal governments and Canadian banks. The City actively trades these bonds to realize capital gains on long term investments. 2020 investment activity included purchases and sales totalling approximately $295 million in trades. Short term investments held by the City include money market instruments with Schedule I and II Canadian banks and credit unions.
- The City’s Investment Policy is reviewed annually by Finance staff. The last update was approved by Council in report F-19-20 on December 14, 2020 providing an increase to the maximum holdings limit on provincial bonds to add more flexibility and potential investment opportunities to the policy.
- An annual review of the investment policy is considered essential in order to respond to changing economic conditions.
- After reviewing the current investment policy, staff have updated the language on banking investment restrictions to expand investment opportunities beyond only bonds to also include additional bank products such as structured notes and term deposits. The restrictions on amount, term and rating requirements were not changed.
- The current low rate interest environment is anticipated to continue, this refinement to the investment policy gives staff the opportunity to consider new banking products being offered by the banks specifically tailored to municipalities.
- Aside from the amendment noted above no further changes to the investment policy are needed at this time.
Climate implications
- The City has had the opportunity and invested in newly issued green bonds by the Province of Ontario and Quebec.
- Green bonds are used to finance projects with specific environmental benefits.
- Access to green bonds is limited as only a small number of provinces and regions are actively issuing these types of debt.
- Staff will continue to monitor these programs and explore opportunities to support these environmental investments when prudent to do so.