Woodhead happy with $17.7m in ORC's account

Having $17.7 million in its managed fund account shows how well the Otago Regional Council has come through the recent world financial crisis, chairman Stephen Woodhead says.

The finance and corporate committee was last week asked to approve a review of its statement of investment policy and objectives (Sipo) which outlines how the council's managed fund is overseen by its fund manager, BNZ Private Bank.

The fund was one aspect of a wide-ranging investment portfolio the council held which included its ownership of Port Otago.

It was set up in 2000 with an initial investment of $10 million as part of a strategy to diversify its investment. An extra $5 million was added in 2004.

Council director of corporate services Wayne Scott said interest and dividends from the funds were returned to council each year and helped offset general rates.

The equity continued to ''ride the markets''. It was made up of $10 million in cash and about $7 million in shares and bonds.

The updated Sipo, a requirement under the Local Government Act, was based on a low-risk investment strategy and provided a policy framework for the council to supervise and monitor the investments.

In general, the fund was expected to return 5.6% per annum.

Mr Woodhead said the Sipo looked comprehensive and reflected the council's position as a public entity which should be risk-adverse.

The returns from the past four to five years showed the council had come through the financial ups and downs of recent years ''pretty well''.

''A lot of investors lost their shirt since 2008 so this comprehensive Sipo provides confidence.''

Mr Scott said there would be a report to the council at the end of the financial quarter which would go through the specifics of the council's investment performance.

Surplus funds held outside the managed fund were managed through a ''multi-bank'' arrangement also managed by BNZ.

The Sipo would now be reviewed each year as part of the council's treasury management policy.

- rebecca.fox@odt.co.nz


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