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Prudent Investor Update, May 2, 2018

ONE Investment Moves Forward on Prudent Investor Strategy

Through prudent investor, municipal governments can earn more over the long-term by building more diverse investment portfolios that are more tailored to local needs, more responsive to markets, and better at managing risk.  

ONE Investment is working to ensure that all of Ontario’s municipalities, regardless of their size or resources, have the option to reap these benefits.

While a few dozen municipalities will be eligible to invest independently, many more will need another way to access the broader investment powers.

Given the complexity of both the municipal sector and applicable securities regulations, ONE is developing a full-service solution to spare municipal governments a lot of the challenges and complexity, while delivering the benefits.

To put ONE on this path, the Boards of Local Authority Services (LAS) and CHUMS Financing Corp (a subsidiary of the Municipal Finance Officers’ Association of Ontario), agreed last week to:
  • Incorporate ONE Investment as a not-for-profit, with a new board comprised of 10 directors, five from each board. The not-for-profit will oversee two streams of investment products: (1) the current “legal list” products, and (2) new offerings under the prudent investor standard.
  • Create a proactive customer service team, to help municipal governments across Ontario understand and pursue a suitable approach to investments for their local needs. Made up of retired municipal treasurers and a CFA, the team will be able to provide advice on asset management, cash flow and investment strategy.
  • Create a Joint Investment Board that will enable municipalities to invest collectively. As per the new prudent investor regulation, the joint board will oversee and implement the investment strategy. ONE is currently seeking municipal sponsors for the Board.
ONE is in discussions with the Ontario Securities Commission to work towards a formal application that will ensure ONE is compliant with all OSC requirements in providing these services.

ONE recognizes that many municipalities do not have the skills and expertise to move to prudent investor without assistance. As well, many do not have the resources to pay for financial services to help them.

As a not for profit with more than 25 years serving the municipal sector, ONE is uniquely positioned to provide services at a much lower cost than for-profit financial institutions. The advantages of a turnkey solution developed by ONE, include:
  • Knowledge of the needs within the municipal sector.
  • Lower management fees than a third-party, for-profit financial institution.
  • Economies of scale from a larger investment pool.
  • A more cost-efficient and timely way to access prudent investor regime
  • As a not-for-profit strongly rooted in the municipal sector, ONE’s interests are completely aligned with its municipal clients.
Stay tuned to our e-newsletter for more information and updates.