Investments Account Objectives & Investment Policy and Guidelines
The Board of Directors of the SVIA (“Board”) has charged the Finance Committee (“Committee”) with overseeing the investment of the operating and reserve funds of the Association. The Committee will generally monitor and review this policy as necessary and, at minimum, annually after audited financial statements are issued. The Committee will also review quarterly financial reports provided by the accountant.
Primary Objectives
- To maintain sufficient liquidity so that the SVIA has reasonable resources available to fulfill its mission
- To seek to preserve capital while providing a reasonable rate of return
- To ensure that all SVIA depository funds are backed by the full faith and credit of the U.S. Government
- To maintain a diversified group of financial institutions for cash management and depository account services
Summary of Accounts – SVIA utilizes a minimum of three accounts:
- an Insured Cash Sweep (ICS) account to maintain FDIC coverage on deposits over the FDIC limit while dealing with a single banking institution.
- a checking account linked to the ICS account which will be the primary account for disbursement of association payments.
- a brokerage account where reserve funds are invested in accordance with Association policy.
Operating Accounts – Operating Accounts will hold the SVIA’s core liquidity assets and consist of the Association’s ICS account and linked checking account, along with additional accounts at other financial institutions as necessary or directed by the Committee. The Board will seek to maintain sufficient assets in Operating Accounts to cover expenses without having to regularly access assets in the Reserve Accounts. Operating Account assets will be fully FDIC-insured demand deposit accounts.
Reserve Account – The Reserve Account will hold the SVIA’s non-core liquidity assets and consists of the Association’s brokerage account. Account deposits and investment balances will be reviewed at least annually by the Committee. Any investment and deposit changes will be made based on recommendations by the Committee with subsequent reporting to the Board.
Rebalancing – At the start of the year, upon approval of the Association budget, accounts will be rebalanced to ensure that 100% of the yearly budget is held between the ICS account and the linked checking account. The target balance for the linked checking account will be set to one month of the budget. The combined total is expected to fluctuate throughout the year as payments are sent and received.
Investment Guidelines
| Permitted Investments | Demand and time bank deposits, U.S. Government & Agency securities and money market accounts (MMAs) |
| Credit Quality | MMAs must be FDIC-insured, US Government Money Market Funds, or rated AAA or equivalent by a National Recognized Statistical Rating Organization (NRSROs). Bank deposits must collectively be under FDIC-insured exposure thresholds per institution. |
| Liquidity | Assets must be reasonably accessible at all times. Reasonable early withdraw/liquidation penalties for time deposits are permitted. |
| Maturity | Operating Account – 100% / 1-day liquidity Reserve Account – Maximum 1-year maturity per time deposit/debt security with no more than 25% of total assets at the time of purchase held in laddered bank deposits. |
See Exhibit A for a listing of the SVIA’s current bank accounts and approved investments
Exhibit A
Current Accounts:
- United Bank – ICS, Checking Account, and FDIC Money Market
- Fidelity – Money Market and three CDs (CDs matured, all Money Market)
- First Bank – Checking Account (transitioning away)
