N.M. Admin. Code § 2.60.25.16

Current through Register Vol. 35, No. 23, December 10, 2024

Section 2.60.25.16 - DIFFERENTIAL RATE INVESTMENT

A. Constitutional and statutory restrictions: The severance tax permanent fund may be invested in a series of investments that are identified in Section 7-27-5 NMSA 1978 as "differential rate" investments. Differential rate (DR) investments are defined as those investments intended to stimulate the economy of New Mexico. DR investments are authorized in Sections 7-27-5.2 through 7-27-5.5, 7-27-5.7, and 7-27-5.13 through 7-27-5.17 NMSA 1978. As a permanent trust fund and in accordance with Section 6-8-7 NMSA 1978, differential rate investments, as with all investments of the fund, are subject to the prudent man rule and must provide reasonable diversification and reasonable yield.

B. Council goals and policies:

(1) The council has adopted the following goals for the management of the differential rate portfolio:

(a) to insure that credit quality is maintained and risk is minimized;

(b) to maintain a diversified portfolio of investments that are distributed among the various programs and throughout the state and its economic sectors;

(c) to stimulate the economy of New Mexico on a continuing basis;

(d) to expand business activity in the state;

(e) to promote the creation and preservation of jobs; and

(f) to provide a reasonable yield.

(2) Achievement of these goals by the state investment office will be pursued under the following policy: The state investment office shall develop investment guidelines and procedures providing requirements that must be met under the various differential rate programs. Each of the guidelines and procedures shall be adopted in accordance with the state's Administrative Procedures Act, other relevant statutes, and council policy. Each differential rate investment program is unique and requires separate guidelines and procedures to administer. The guidelines for each DR program will incorporate the specific requirements that are specified by statute and will also conform to industry practices for that type of investment. The staff must therefore conduct independent research and analysis on each separate security type to understand the risks involved. Each DR investment should then be structured to minimize all anticipated risks and to meet all New Mexico and federal legal requirements. Finally, all investments must be properly documented for auditing purposes. These steps will insure a reasonable probability of achieving the goals and objectives of the differential rate programs.

N.M. Admin. Code § 2.60.25.16

Recompiled 10/1/01