REQUEST FOR PROPOSAL For OUTSOURCED CHIEF INVESTMENT OFFICER SERVICES CONCORDIA UNIVERSITY, NEBRASKA

Transcription

1 REQUEST FOR PROPOSAL For OUTSOURCED CHIEF INVESTMENT OFFICER SERVICES CONCORDIA UNIVERSITY, NEBRASKA April 18, 2014

2 TIMETABLE The following is the time schedule for selection of a firm to provide what is commonly referred to as outsourced chief investment officer ( OCIO ) services for the investment portfolio of the Endowment fund ( Endowment ) of ( University ). All dates are subject to modification. 1. RFP issuance April 18, Deadline to submit written questions May 2, RFP response deadline May 13, Evaluation of RFP responses and selection of firms for on-site interviews May 30, On-site interviews and selection of firm June 24, Final due diligence on selected firm and sign contract July 2, Selected firm participates in Investment Committee quarterly meeting July 27, Selected firm presents to the Board of Regents July 29, Transition of portfolio assets August 2014 PROPOSAL SPECIFICATIONS The completed Response must be delivered by May 13, 2014, 5:00 p.m., Central Time. Any Response delivered after the deadline will not be considered. Please submit the Response to: Curt Sherman Director of Investments 800 N. Columbia Ave. Seward, NE The original Response must contain original signatures, be labeled Master Copy, and placed in a loose leaf, three-ringed binder, which displays the firm s name on the outside front cover. In addition, please send one copy of your Response plus one copy to curt.sherman@cune.edu. The questions and/or requests made in this RFP shall be duplicated in their entirety in the Response with each question and/or request repeated before the answer or response. The Response must be accompanied by a cover letter that should be signed by at least one individual who is authorized to bind the firm contractually. The cover letter must include: 1. The firm s name, address, , telephone and fax numbers. 2. The firm s Federal Employer Identification Number and, if applicable, Corporate Identification Number. 3. The name, title or position, address, and telephone number of the individual signing the cover letter on behalf of the firm. 4. A statement, signed by the person purporting to have the authority to commit the firm to terms of the proposal, indicating that the signer is authorized to legally bind the firm to contract if the terms of the proposal are accepted by the University. 5. The name, title or position, address, and telephone number of the primary contact and/or account administrator, if different from individual signing the cover letter. 6. An acknowledgement by the firm that the proposal is a firm and irrevocable offer for one (1) year from the date of the proposal. 7. A statement that the firm is willing and able to perform the services described in this RFP. 8. A statement that the firm has available the staff and other resources required to perform all services required by the RFP and to provide all required deliverables within the specified time frames

3 SUBMISSION OF WRITTEN QUESTIONS Questions regarding the information or requirements contained in this RFP must be received by May 2, 2014, 5:00 p.m., Central Time. Questions must be ed to SELECTION PROCESS University Staff will evaluate each Response to determine if it was submitted in accordance with the requirements set forth in this RFP. All non-qualifying Responses will be rejected at this time and the responding firm so notified. All qualifying Responses will be evaluated by an appointed sub-committee of the Investment Committee ( IC ) and University Staff. Based upon this evaluation, the sub-committee will invite chosen candidates to participate in on-site interviews on June 24, 2014 where a finalist will then be selected by the IC. Final due diligence on the selected firm will then be conducted and a formal agreement will be signed by July 2, The selected firm will participate in the IC s regular quarterly meeting on July 27, 2014 and present to the University s Board of Regents on July 29, Transition of portfolio assets will commence in August It is our intention to maintain the timetable spelled out above. We request that firms submitting proposals await the response of the University and not place calls to the University Staff seeking to learn the status of the proposal. SCOPE OF SERVICES The Board of Regents maintains ultimate fiduciary responsibility for the effective stewardship of the Endowment. The IC assists the Board of Regents in fulfilling its fiduciary responsibilities and ensuring that the policies of the Endowment connect to the University s mission, vision and longterm strategic plan. These responsibilities include, but are not limited to, the following: 1. Implement the Investment Policy Statement ( IPS ) as adopted by the Board of Regents from time to time and review the IPS on a regular basis and recommend amendments of the IPS to the Board of Regents as necessary. 2. Monitor compliance with the IPS. 3. Take all actions regarding the Endowment as set forth in the IPS including but not limited to, engaging various parties to assist the IC in fulfilling its duties. 4. Report to the Board of Regents quarterly on actions taken by the IC along with portfolio performance. The IC seeks to engage a firm to provide what is commonly referred to as outsourced chief investment officer ( OCIO ) services. The IC wishes to delegate essentially the entire investment management function to the OCIO partner. Responsibilities of the OCIO partner include: 1. Take all necessary actions regarding the effective management of the portfolio as set forth in the IPS and within the parameters set by the IC including, but not limited to, the following: - portfolio construction - selection and termination of investment managers/funds - investment manager/fund due diligence and ongoing monitoring - portfolio rebalancing - custodial services - risk management - 2 -

4 2. Assist the IC in an annual review of the following to determine if changes are necessary to facilitate the achievement of the long-term investment objectives set forth in the IPS and provide recommendations of changes to the IC: - portfolio- and risk-related parameters in the IPS - target asset allocation - determine proper benchmarks - appropriateness of spending rate 3. Report to the IC quarterly on portfolio performance, allocation and activity. 4. Assist in providing education to the IC, Board of Regents and University staff. Only firms with the willingness and ability to offer services under this total outsourcing approach will be considered. TERMS OF ENGAGEMENT This RFP is not an offer but a request to receive a Response. The University will consider a Response as an offer to develop an agreement based upon the contents of the Response. The University s engagement of any firm to provide OCIO services will be documented in an agreement between the University and the selected firm. The agreement may not be assigned by either party without the prior consent of the other party. The agreement may be terminated, with or without cause, by either party at any time as of the end of any month upon 30 days prior written notice to the other party. The firm will be an independent contractor for purposes of the engagement and will be required to indemnify, hold harmless, and, at the University s election, to defend the University from and against all losses, expenses and claims incurred by the University as a result of the firm s negligent or willful acts or omissions. The University will not indemnify, hold harmless, or agree to limit the liability of the firm for the firm s negligent or willful acts or omissions in connection with this engagement. The University and the successful firm shall determine mutually agreeable starting dates. The agreement shall not become effective until signed by all parties. Responses that are not selected will remain the property of the University. I. Organizational Background and Personnel QUESTIONNAIRE A) Provide a brief summary and history of your firm, including year of inception, ownership structure, affiliated and subsidiary companies and relationships, joint ventures, business partners, number and location of offices, and number of professional consultants. Indicate which office would service our account. B) Provide the names, titles, home office locations and biographies of key individuals who would be directly responsible for providing services to our account. Include the year each individual joined your firm, current responsibilities, area of expertise, experience, education, professional designations and memberships. Detail their roles and the scope of their involvement for this assignment. C) Does your firm have any ownership or financial relationships with any other financial firms, including asset management, broker/dealer, banking, insurance or actuarial firms? - 3 -

5 D) Is your firm, its parent or affiliate(s) a registered investment advisor with the SEC under the Investment Advisors Act of 1940? If not, what is your fiduciary classification? Please provide a copy of your most recent SEC Form ADV Part II. E) Within the last five years has your organization or an officer or principal been involved in any business litigation or other legal proceedings relating to your investment advisory and/or consulting services? If so, provide an explanation and indicate the current status or disposition. F) What protection does your firm offer it clients from negligence or willful acts of omission? Acts of fraud? Describe any insurance coverage your firm may have that is applicable in this area. II. Client Services A) Describe your firm s client service philosophy in regards to the OCIO services model. If you provide traditional consulting services, how do your OCIO services differ? B) What services does your firm provide for the education and enhancement of our IC members? III. Investment Philosophy and Process A) Describe your firm s investment philosophy. Has it changed significantly over the past 5 years? B) Describe the process your firm will use to construct a portfolio for us, including a description of your approach to developing the investment goals/objectives/policies and the expected role of the IC and University staff. C) Included with this Request is our portfolio and return history as of December 31, Per our current IPS, the primary investment objective of the Endowment is to achieve an annualized total return (net of fees and expenses) over a full market cycle (3 to 5 years) which equals or exceeds the assumed spending rate of 5% plus the rate of inflation. If you wish to do so, we would be interested in your opinion on our return history and current portfolio and its ability to meet our investment objective. Discuss how your firm, if given full discretion, would change the portfolio. Please provide your rationale. IV. Investment Manager Research and Selection A) How are investment managers/funds selected? B) How does your firm evaluate and monitor investment managers/funds? What key criteria do you consider in the review of an investment manager/fund? V. Risk Management A) Describe the manner in which your firm accounts for and allocates risk at the total portfolio level. How are decisions as to allocation of portfolio risk taken and who makes those decisions? - 4 -

6 VI. Performance Evaluation and Reporting Request for Proposal OCIO Services A) Does your firm offer comprehensive performance reporting that tracks progress against goals and monitors the level of risk across the entire portfolio? If so, how frequently and how soon after the end of a period are the reports available? Please provide a sample performance report. Describe your firm s ability to provide customized reporting based on specific client preferences or requirements B) How do you benchmark client portfolios? How should we, as a client, measure our joint success? VII. Client Base A) What is the total dollar amount of client assets advised by your firm? Please provide a current client summary by client type. B) Provide a list of clients that may be contacted as references for which you provide OCIO services. VIII. Code of Ethics & Conflicts of Interest IX. Fees A) Describe your firm s code of ethics and conflict of interest policies. Include an explanation of how these policies and any other measures taken by your firm insure that your firm s actions are always aligned with your clients best interests. B) If you answered yes to the question at section I, E), then describe how your firm avoids any potential conflicts of interest. A) Specify all fees (consulting, custodial, management, etc.) applicable to the OCIO services described in the Scope of Services section. Please specify whether the fee quoted is allinclusive or could other expenses occur as a result of this relationship (travel, special projects, etc.). X. Additional Information A) Provide an executive summary that explains your firm s strengths and competitive advantages (i.e. why should we select your firm?). B) Provide the primary contact information for questions and future contact

7 Endowment Portfolio - Allocation and Performance December 31, 2013 Annualized Manager Ticker Asset Class Market Value QTR YTD Fiscal YTD 1 YR 3 YR 5YR Since 1/1/04 Current % Current IPS Target Fixed Income Vanguard Inflation Protected Secs VAIPX TIPS 1,070, N/A 2.68% 3.00% Barclays Capital U.S. Treasury: U.S. TIPS PIMCO Total Return PTTRX US Bond 725, % 2.00% Barclays Aggregate Loomis Sayles Bond LSBDX US Bond 2,029, % 5.00% Barclays Capital U.S. Aggregate PIMCO Foreign Bond (Hedged) PFORX International Bond 3,918, % 10.00% Barlcays Global Aggregate Ex USD (Hedged) PIMCO Emerging Local Bond PELBX Emerging Market Debt 1,377, N/A 3.45% 4.00% JPM GBI-EM Global Diversified JPMorgan High Yield Bond Select OHYFX High Yield 3,561, % 9.00% Barclays US Corp: High Yield Total Fixed Income 12,682, % 33.00% Large Cap Dodge & Cox Stock DODGX Large Cap Value 1,303, % 3.00% Russell 1000 Value ishares S&P 500 IVV Large Cap Core 1,278, % 3.00% S&P ishares Russell 1000 Growth IWF Large Cap Growth 1,315, % 3.00% Russell 1000 Growth Total Large/Mid Cap 3,897, % 9.00% Small Cap DFA Small Cap Value DFSVX Small Cap Value 757, % 1.50% Russell 2000 Value Conestoga Small Cap Growth CCASX Small Cap Growth 688, % 1.50% Russell 2000 Growth Total Small Cap 1,446, % 3.00% Int'l Equity/ American Funds EuroPacific Growth AEGFX International Large Core 3,461, N/A 8.66% 8.00% Emerging Mrkts MSCI AC World ex USA Aberdeen Emerging Marrkets ABEMX Emerging Markets 2,147, N/A 5.37% 6.00% MSCI Emerging Markets Total Int'l Equity 5,608, % 14.00% REITS Nuveen Real Estate Secs I FARCX Domestic REITS 2,466, % 7.00% FTSE NAREIT Equity-REIT Total REITS 2,466, % 7.00% Alternative PIMCO Commodities Real Return Strategy PCRIX Commodities 2,937, % 9.00% Dow UBS Commodity Index Grosvenor Inst'l Partners Hedge Fund 4,505, % 10.00% HFRI Fund of Funds Index Magnitude International Hedge Fund 4,097, % 10.00% HFRI Fund of Funds Index Kayne Anderson KYN MLP 1,213, N/A 3.04% 2.50% Alerian MLP Tortoise TYG MLP 1,114, N/A 2.79% 2.50% Alerian MLP Total Alternatives 13,868, % 34.00% Total Composite 39,970, % % CPI + 5% ^ - Date when management of the endowment portfolio was transferred to University control.