§ 401-56. Diversification.

A. 

Diversification should be interpreted in two ways: in terms of maturity as well as instrument type and issuer. The diversification concept should include prohibition against over-concentration of maturities, as well as concentration in a specific issuer. With the exception of United States Treasury obligations or investments fully collateralized by United States Treasuries or agencies and state pools (MMDT), no more than 10% of the Town's investments or an amount equal to the maximum amount of FDIC and DIF insurance coverage, whichever is greater, shall be invested in a single security issuer.

B. 

In order to enhance total yield and fulfill the objectives of this policy, the investment management style will be directed towards an active rather than passive portfolio. The following maximum limits are established for the Town's total portfolio:

(1) 

Certificates of deposit: 50%.

(2) 

United States Treasury notes/bonds/bills: 100%.

(3) 

United States agencies: 100%.

(4) 

Common and preferred stock: 10%.

(5) 

Investment grade corporate bonds: 10%.

C. 

In the Town's attempt to obtain its yield objectives, the policies set forth in this section shall be exercised in such a manner as to maintain the liquidity necessary to ensure that the next projected disbursement date and payroll dates are covered.

D. 

In the event of the creation of a new or previously unavailable type of investment vehicle, upon the recommendation of the Treasurer and upon the written approval of the Town Manager and Finance Director, the Treasurer may invest in such an instrument to the extent permitted by this policy.