TITLE
Title
CHANDLER ASSET MANAGEMENT CONTRACT
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SPONSOR
Sponsor
Donald Warn
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BACKGROUND
Background
Due to the amount of time and expertise required to manage the County’s investment portfolio, it was determined there is a need to obtain professional portfolio investment and management services. The County issued a request for proposals (RFP) soliciting responses from qualified firms to provide nondiscretionary investment advisor and management services. There were four (4) written proposals received regarding the bid event. The review committee evaluated and scored each proposal independently based on the RFP criteria and Chandler Asset Management is the recommended firm.
Chandler Asset Management will bring over 30 years of public sector fixed income investment advisory experience to the County. Staff time spent dealing with portfolio management will be significantly reduced because of the service provided by our investment advisors and it will ensure the continuity of business for management of our investment portfolio. Chandler Asset Management uses over 50 different brokers/dealers and can obtain better pricing on investment transactions due to the size of their purchases; this translates into roughly 10 basis points (bp) to 15bp (100 basis points is the equivalent of 1-percent) of additional earnings on our investment purchases. This advantage will provide the County with market access that we would not be able to achieve on their own. Chandler Asset Management will provide a host of services including portfolio structure and investment analysis, investment recommendations, trade execution, settlement and accounting, safekeeping and custody reporting, required GASB 40 and 72 reporting, and they will provide detailed monthly investment reports that includes all the criteria outlined in our investment policy.
The fee for their services is calculated on the size of the portfolio they manage and is approximately 4bp for the County. The size of our portfolio varies throughout the year and based on our average portfolio of $262 million, the annual fee would be approximately $100,000. The County maintains a relatively short-term portfolio with a weighted average maturity of less than two-years and assuming normal reinvestment of maturities, the additional earnings generated by Chandler Asset Management’s buying power will more than cover the fees for their service.
For Fiscal Year 2025 and beyond, additional budget would be required in the Finance Department budget to accommodate the annual fee of $100,000. The annual fee will be offset by the additional earnings from the more favorable pricing the County will receive on its investment purchases as described above and should result in a net gain in interest earnings over and above the annual fee.
This agenda item requests Board approval to approve a three-year contract with a two-year optional renewal period between Guilford County and Chandler Asset Management to provide nondiscretionary investment advisor and management services.
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BUDGET IMPACT
Budget Impact
General Fund
$42,000 increase in Appropriation to Finance
$42,000 increase to Other Revenue
FUTURE FUNDING COMMENSURATE WITH ADOPTION OF THE FY 2024-25 BUDGET
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REQUESTED ACTION
Requested Action
Approve Chandler Asset Management Contract, in substantial form, in the amount not to exceed $300,000 to be effective March 1, 2024 for a term of three (3) years with option to extend for an additional two (2) years; approve budget amendment totaling $42,000.
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