Delegation of Authority
The Committee is the named fiduciary with the responsibility of the Foundation. The Committee recognizes its responsibility to manage the Fund with care, skill, prudence, and diligence, providing adequate diversification in accordance with applicable laws and regulations, and to enhance long-term returns within the established risk parameters. The Committee has delegated certain responsibilities as described below to the Investment Consultant.
Delegation of Responsibility
|
Consultant |
Committee |
Investment Policies |
Recommend |
Approve |
Asset Allocation/Ranges |
Recommend |
Approve |
Investment Objectives |
Recommend |
Approve |
Investment Decisions: |
Asset Types |
Approve |
Monitor |
Tactical Asset Allocation |
Approve |
Monitor |
Reclassify Asset Classes Between Buckets |
Approve |
Monitor |
Investment Managers |
Approve |
Monitor |
Diversification |
Approve |
Monitor |
Minimum Investment Standards |
Approve |
Monitor |
Investment Performance |
Report |
Monitor |
Responsibilities of the Committee
- Overseeing this Investment Policy, ensuring that the Foundation is prudently managed
- Reviewing the risk-adjusted portfolio performance in the context of established standards of performance against policy targets and benchmarks
- Evaluating, selecting, monitoring, and, when appropriate, terminating one or more Investment Consultants
- Evaluating the Investment Consultant’s effectiveness and contributions to the organization
- Ensuring that each of the foregoing duties is carried out in compliance with all applicable laws and regulations
Responsibilities of the Investment Consultant
Implementation
- Coordinating the day-to-day oversight of the assets and implementing strategy and policy
- Communicating the investment objectives, guidelines, and standards (including any material changes that may occur) to the Investment Managers or other Fund providers
- Evaluating, selecting, monitoring, and, when appropriate, terminating a Custodian Bank
- Measuring, selecting, monitoring, and, when appropriate, hiring/terminating Investment Managers, pooled funds, mutual funds, or other appropriate investment vehicles.
- Completing other duties as delegated by the Committee
- Acting as the primary contact between the Investment Managers, Custodian, and any other parties in the management of the Funds
Investment Policy
Review the Investment Policy and recommend appropriate changes for Committee consideration to meet the Fund’s objectives. Make recommendations, when deemed necessary, about objectives and policy provisions based upon material and sustained changes in the capital markets or the Foundation’s needs.
Asset Allocation
Evaluate and recommend, with supporting materials, the appropriate portfolio weightings among the different portfolios described in Section II.E. Additionally, evaluate whether asset classes are properly classified within the framework described in Section II.E on an ongoing basis.
Selection of Investment Vehicles or Managers
Take responsibility for the decision to hire, retain or terminate Investment Managers. This will include taking the lead role in identifying and screening candidates for appropriate portfolios based upon performance and organizational characteristics. The Investment Consultant will perform initial due diligence reviews and quantify the trade-offs between expected returns and risks among the various candidates.
Compensation Negotiation and Review
Responsible for compensation negotiations with Investment Managers, Custodians, and other service providers. On a regular basis, a review of the compensation arrangements of providers will be completed to ensure fees are appropriate with current market levels.
Performance Evaluation
A quarterly performance evaluation of the Fund and its component parts will be completed. A written report will be provided to the Committee following the close of the quarter. The written report will cover four basic areas:
- Returns: A full evaluation of total time-weighted returns over various periods will be prepared.
- Return Comparisons: Returns will be compared to the appropriate benchmark indices and a statistical universe of similar funds.
- Diagnostics: A full measurement of risk-adjusted performance, analyses of risks, and return attribution will be completed.
- Compliance: Portfolios will be reviewed for compliance with the objectives, targets, and policy guidelines specified in this Policy.
The Investment Consultant will also make available regular qualitative analysis concerning each manager’s organization, philosophy, account and personnel growth and turnover, and any other issues that may affect the manager’s ability to meet the Fund’s objectives.
Review Meetings
Investment Consultant will attend meetings at the request of the Committee. The agenda will include (at a minimum):
- A review and re-appraisal of the investment program based upon current market conditions.
- An evaluation of possible strategy changes based upon market innovations or structural changes.
- A discussion of any key policy issues facing the Committee.
- Commentary on investment results in light of the appropriate standards of performance.
- A presentation on the progress of the portfolio implementation to allocation targets.
- A discussion of Investment Manager changes since the prior quarterly meeting.
- Any other matters as deemed appropriate by the Finance Committee.
Investment Manager Review
Facilitate regular formal Investment Manager reviews and evaluations.
Administrative Support
The Investment Consultant will assist the Committee and/or Staff in reviewing documents, drafting letters, and facilitating processes as requested.
Documentation of Investment Consultant’s Investment Advisor Registration
Annually or upon material revision, provide a copy of the Investment Consultant’s Securities Exchange Commission Registration Form ADV, Part II.
Communication
Annually or upon material event, provide notification of the Investment Consultant’s organizational changes, including, but not limited to; terminations, departure of key employees, or additions to the senior-level staff.
Monitoring
Benchmarking
This policy establishes several benchmarks from a top-down perspective to evaluate the value-added from portfolio management and determine whether the Fund is performing above, at, or below expectation. The benchmark tool is designed to assist the Committee in determining the areas of strength in the portfolio, areas that may need improvement/attention, and when tactical opportunities may exist. Each of the five groupings (Public Equity, Fixed Income, Markets Alternatives, Private Markets, and Real Assets) serves a specific role in the portfolio, and allocations to the different portfolios will have different goals. Therefore, each portfolio will have a ”long-term” and “short-term” benchmark. The long-term performance of each portfolio should be evaluated relative to the long-term benchmark over a full market cycle (typically at least 5 years and includes an up period and a down period). The short-term benchmark will be the metric used for intra-cycle periodic performance evaluation.
- Public Equity Portfolio
- Objective: deliver global public equity market returns and volatility.
- Long-Term Benchmark: MSCI All Country World Index
- Short-Term Benchmark: MSCI All Country World Index
- Fixed Income Portfolio
- Objective: Deliver public fixed income market returns and volatility.
- Long-Term Benchmark: Weighted combination of indices for the underlying strategies within the portfolio.
- Short-Term Benchmark: Weighted combination of indices for the underlying strategies within the portfolio.
- Marketable Alternatives Portfolio
- Objective: Provide return from diversified sources of risk to the portfolio.
- Long-Term Benchmark: 75% of the global public equity market returns with 50% of the volatility.
- Short-Term Benchmark: Weighted combination of indices for the underlying strategies within the portfolio.
- Private Markets Portfolio
- Objective: deliver US Equity returns with an illiquidity premium at reduced volatility due to the mark-to-market nature of private partnerships.
- Long-Term Benchmark: MSCI ACWI + 1.5%
- Short-Term Benchmark: Benchmarked against itself for the first 5 years, then converts to The Burgiss Private Equity Composite.
- Real Assets Portfolio
- Objective: one or more of the following: deliver real returns (net of inflation returns), provide inflation protection, provide diversification.
- Long-Term Benchmark: CPI + 4.0%
- Short-Term Benchmark: Weighted combination of indices for the underlying strategies within the portfolio.
Other Performance Measures and Diagnostics
In addition to the benchmarking efforts described above, the Committee, Staff, and Investment Consultant will utilize numerous benchmarks, peer samples, diagnostic tools, comparative analytics, and risk measures as part of the ongoing monitoring and evaluation effort.