Recent turmoil in the global credit markets has created a far greater awareness of the requirement for improved transparency and disclosure standards for Council investments. Longreach advocates market ‘best practices’ in each of the key following areas:
Investment Risks – Each investment proposal considered by Council should include a plain English description of the risks associated with the investment and should include the circumstances in which Council could lose some, or all of its interest and/or principal.
Liquidity – Councils should clearly understand the underlying liquidity of the investment and precisely how they can redeem their investment.
Valuations – The investment valuations provided to Council should represent the “fair market value” for the investment and should reflect the price at which the investment can be redeemed for all or any part of the investment.
Disclosure and Transparency – The accompanying investment documentation should provide details with respect to the underlying credit risks of the investment as well as a breakdown of all up front and ongoing fees including any redemption or exit charges.
Accurate Performance Measures – The most accurate measure of investment performance should include both the income received in addition to changes in the capital value of the investment over the reporting period.
Understanding and being fully informed on each of the above points will allow Council to assess the merits of any investment.
Please contact Stuart Burns or Simon Teong at Longreach Financial Group on (02) 9239 9000, for assistance in reviewing these key areas of your Council’s portfolio.
*Copy supplied by Longreach Financial Group
