General Funds Investment Policy

Transcription

1 General Funds Investment Policy FINP 19.1 Relevant UTAS Ordinance, Rule and/or GLP No. Relevant State/Federal Govt. Legislation Commencement Date 8 April 2005 Review Date 8 April 2009 Ordinance 1 The Role of Council Ordinance 5 Council Committees Governance Level Principle 5 Investment University of Tasmania Act 1992 POLICY STATEMENT 1 Intent The University pursues a policy of maximising the investment return on cash balances, reserves and restricted funds, in an economic and efficient manner, subject to an overriding commitment to financial prudence in managing investment funds, and in accordance with approved investment criteria. 2 Scope This policy applies to Council, the, Investment Managers appointed to manage funds on behalf of the University, Investment Consultants appointed to provide expert and independent advice in regard to investment strategy and management, and the Executive Director, Finance and Administration. 3 Objective(s) The objectives of this policy are to: Detail the authority delegated by Council; and Provide guidelines for the composition of general funds investment. 4 Definitions and Acronyms Investment Manager Pooled Managed Funds The term Investment Manager used in this policy refers to any Company appointed by the University to manage funds on behalf of the University. Investments are structured to meet the University's liquidity and return on investment requirements. The Investment Managers invest in short and long term investments in accordance with this investment policy. The term Pooled Managed Funds refers to investments in any pooled investment vehicle (e.g. a Unit Trust).

2 5 Policy Maker As Council approves the policy on the recommendation of the, it is the policy owner. 6 Policy Provisions 6.1 Authority Delegated by Council Council delegates authority as follows: is authorised to appoint one or more Investment Managers to manage funds on behalf of the University, and an investment consultant to provide expert and independent advice in regard to investment strategy and management. Investment Managers are authorised to invest in securities as defined in this policy subject to: - the conditions of the agreement signed between the University and the Investment Manager; - the specific directions by the Executive Director, Finance and Administration concerning University liquidity requirements; and - monthly review of performance by the. The will determine the level of assets to be held from time to time, on the advice of the Investment Consultant and advise Council with respect to investment management issues. The Executive Director, Finance and Administration is authorised to re-invest surplus funds, subject to the provisions of this Investment Policy. The Executive Director, Finance and Administration is authorised to withdraw invested funds to the extent necessary to meet University liquidity requirements. The Executive Director, Finance and Administration is authorised to withdraw and re-invest funds to the extent necessary to implement written advice from the Investment Consultant, provided that the asset allocation to individual sectors remains within the ranges specified in this policy. The Executive Director, Finance and Administration must report to Finance Committee any withdrawal or re-investment made under clause 6. The Executive Director, Finance and Administration is authorised to amend the benchmark index and Schedules A and B of this policy to reflect minuted decisions made by.

3 6.2 Composition of Investment Funds Treasury Funds Treasury Funds comprise operating funds or treasury funds which should be managed in a risk averse manner. The basis for investment of these funds is that a loss of capital over a financial year would be undesirable. Treasury Funds are managed on a twelve month investment horizon. The investment objectives for the Treasury Funds are: to produce a positive after fees return over each financial year; and to achieve, over rolling three year periods, an average after fees annual return that is at least equal to the benchmark return specified below. Benchmark Weighting % UBS Australia Bank Bill Index 100 The management is undertaken in a manner that minimises the risk of the investment producing a negative return over any financial year. Whilst this is the investment objective, it is recognised that in extreme market conditions, a negative return is possible. Consistent with the nature of the funds and the investment objectives, the Treasury Funds will be invested in at call deposits with Tascorp. Short-term deposits will be invested with the University's Bank or Bank Accepted Bills Investment Funds Investment Funds comprise all funds other than Trust Funds. A longer-term investment horizon applies to these funds, with an objective to obtain a rate of return that is 3.5% above the rate of inflation (as measured by Headline CPI). Despite this objective, and although based on projected cash flows, a decline in market value in any one year should not be a major concern. Indeed strict adherence to this objective would unduly limit the ability of the fund to invest in more growth oriented assets. The Investment Funds are held to meet capital and/or income endowments, prizes, scholarships and emerging superannuation liabilities. As a result the investment horizon is a longer-term horizon. The investment objectives for the Investment Funds are: over rolling three year periods, achieve an average annual after fees return at least equal to the average increase in Headline CPI plus 3.5%; and over rolling three year periods, achieve an average before fees annual return that is at least equal to the benchmark return as specified below.

4 Sector Benchmark Index Weighting % Australian Shares S&P AXS 300 Accumulation Index 25.0 Overseas Shares MSCI Accumulation Index (ex Australia) (50% currency hedged) in AUD 19.5 Direct Property Mercer Direct Property Index 9.0 Australian Listed Property Global Listed Property Australian Fixed Interest International Fixed Interest Australian & International Cash & cash equivalents S&P ASX 300 Listed Property Trust Accumulation Index FTSE EPRA/NAREIT Global Real Estate Index (hedged) + UBS Australia Composite Bond Index (all series, all maturities) Citigroup World Government Bond Index ex Australia, Hedged into AUD UBS Australia Bank Bill Index 5.0 Absolute Return UBS Australia Bank Bill Index 15.0 Over rolling three year periods, achieve an average after fees annual return that is at least equal to the return on the UBS Bank Bill index. To limit the probability of a negative return to be no more than 1 in every 7 years. Consistent with the nature of the funds and the investment objectives, broad allowable asset allocation ranges are shown in Schedule A. 6.3 Approved Investments Investments approved by the are shown in Schedule B. 7 Supporting/Related Documents N/A 8 Key Words Investment Policy Treasury Funds Investment Fund 9 Supporting Procedures/Guidelines N/A

5 RESPONSIBILITIES Implementation Compliance Monitoring and Evaluation Development and/or Review Interpretation and Advice Investment Managers Investment Consultants Executive Director, Finance and Administration The is responsible for interpreting and advising Council on the policy WHO NEEDS TO KNOW THIS POLICY? Financial Services staff EFFECTIVENESS OF THIS POLICY - POLICY HISTORY Policy No. Previously coded PI Previously coded FINP 5.1 (2009) Recoded FINP 19.1 (October 2009) Approved / Rescinded Approved by Council (08/04/2005) Amended by Resolution No. 05/3/37, 05/Circ3/1, 06/3/28, 07/5/16 Date 08/04/2005 Approved by Council Resolution Number 05/2/34

6 Schedule A: Investment Funds Asset Allocation Ranges Sector Minimum % Maximum % Australian Shares International Shares Direct Property 5 15 Australian and Global Listed Property Securities 0 10 Australian Fixed Interest 5 15 International Fixed Interest Australian & International Cash and cash equivalents 0 20 Absolute Return 5 20

7 Schedule B: General Fund Approved Investments Australian Shares Schroder Australian Equity Fund BIF Australian Alpha Equity Fund GMO Australian Equity Trust International Shares Barclays Hedged International Alpha Equity Fund (Active Currency) Barclays International Alpha Equity Fund (Active Currency) Alliance Bernstein Global Style Blend (unhedged) Direct Property Australian Prime Property Funds Retail Australian Prime Property Funds Industrial Australian Prime Property Funds Commercial Listed Property Vanguard Property Securities Index Perennial Global Property Securities Trust Australian Fixed Interest Tascorp Fixed Interest Fund International Fixed Interest Macquarie Funds Management True Index Global Bond Fund Australian & International Cash & cash equivalents Colonial First State Global Credit Income Tascorp Cash Index Fund Tascorp Cash Management Fund Bank Accepted Bills CBA Term Deposits Absolute Return BGI Total Return Multi Opportunity Fund GMO Multi-strategy Trust