Donor-Advised Fund Segregated Account Investment Information Form

Transcription

1 Donor-Advised Fund Segregated Account Investment Information Form Complete this form and return to National Philanthropic Trust (NPT) at or fax to Please type or print responses in clear, block letters/numbers. 1. Donor-Advised Fund Information Donor-advised fund name, and Donor-advised fund ID, if available 2. Financial Advisor Information Financial Advisor Name Financial Institution 3. Financial Institution that will be the custodian of NPT s assets Institution Name 4. Select Account Type Please list all Account Numbers that are associated with this strategy, as well as the Investment Advisory Fee for each account, as applicable. ACCOUNT TYPE Discretionary or Non-Discretionary ACCOUNT NUMBER If account numbers are not known at this time, they must be provided to NPT once established INVESTMENT ADVISORS FEE (in basis points) 5. Complete proposed investment strategy tables, as applicable. If you have a proposal in a different format, please attach to this document and ensure it contains all the information required below. Do all proposed investments meet NPT s Investment Compliance Standards? (see page 2) Yes No DISCRETIONARY ASSET CLASS STRATEGIC ALLOCATION NON-DISCRETIONARY ALL HOLDINGS* TOTAL EQUITY US Equity Non-US Equity Global Equity TOTAL FIXED INCOME & CASH Cash & Short Term US Fixed Income Non-US Fixed Income TICKER NAME WEIGHT TOTAL INVESTMENT ASSETS 100 Asset Class Tactical Flexibility, if needed. (e.g. +/- 5) * If holdings exceed space, please attach a separate document inclusive of all holdings. Page 1 of 5

2 5. Complete proposed investment strategy tables, continued NPT requires that an appropriate benchmark be provided that is based on the recommended investment strategy for the portfolio. Benchmarks may consist of a single index, or be a blend of multiple indices, depending on the recommended investment strategy. NPT will use this information to periodically review relative performance of the portfolio versus the agreed-upon benchmark. Benchmarks should not be changed unless there is an NPT-approved change in the investment strategy. Providing the details of an appropriate benchmark does not remove the need to have portfolio and benchmark performance information included on quarterly statements. BENCHMARK DOMESTIC EQUITY INDEX WEIGHT INTERNATIONAL/GLOBAL EQUITY INDEX WEIGHT FIXED INCOME/CASH OTHER TOTAL PERCENT MUST EQUAL Ensure NPT has access to view the accounts online. Ensure account(s) is/are established to produce quarterly statements, including portfolio benchmark performance specific to the trading strategy. For multi-account strategies, blended benchmarks should be included on statements, as applicable. Investments cannot be implemented until proposed strategy/investments is/are approved by NPT s Investment Committee. Once NPT has confirmed that account(s) is/are viewable online, gifts can be contributed directly to the account. NATIONAL PHILANTHROPIC TRUST INVESTMENT COMPLIANCE STANDARDS Overview National Philanthropic Trust ( NPT ) is a public charity and a sponsor of donor-advised funds ( DAFs ). To facilitate charitable giving, NPT allows donors whose DAFs meet a threshold asset value to recommend a customized investment allocation. Where a donor elects the customized allocation option, NPT works with the donor s financial advisor to open a separate DAF investment account (each an account ). NPT is the sole owner of each account and retains legal control over all of the account assets. NPT delegates investment management responsibility over each Branch Account on either a discretionary or non-discretionary basis, pursuant to an investment management agreement. Each account must be invested according to an asset allocation that is (1) consistent with NPT s Investment Policy Guidelines ( IPG ); and (2) pre-approved by NPT. Any change to the asset allocation of an account must be approved by NPT. In the case of non-discretionary delegation, all investment decisions must be pre-approved by NPT. (continued on next pages) Page 2 of 5

3 NPT monitors the activity and overall performance of each account and will contact the financial advisor to request correction of inappropriate account activities including, but not limited to, the following: a. Excessive or unnecessary fees; b. Day trading activity, marked shift in diversification or other irregular trading activities; c. Underperformance of the portfolio relative to an appropriate portfolio benchmark for two consecutive review periods; d. Investments violating NPT s Investment Policy, including: i. In discretionary accounts, a breach of the approved asset allocation or other IPG criteria; or ii. In non-discretionary accounts, any unapproved investments. Failure to promptly correct inappropriate account activities or multiple instances of inappropriate activity, may result in termination of an account at NPT s discretion. Permitted Investments The following guidelines from NPT s Investment Policy summarize the holdings that are permitted within an approved asset allocation. Any proposed investments that do not fall within these guidelines must be pre-approved by NPT. a. Cash Equivalents Short-term instruments maturing in 360 days or less shall have a quality rating of at least investment grade, according to the rating system of either Standard & Poor s, Moody s, or Fitch. Bankers acceptances, certificates of deposit and savings accounts must be made with United States banks or financial institutions, foreign branches of United States banks, or United States branches of foreign banks, which are federally insured with unrestricted capital of at least $50 million. b. Mutual Funds and ETFs Mutual Funds and/or ETFs purchased and held in Discretionary and/or Non-Discretionary accounts shall be considered permitted investments if selected according to the due diligence/manager selection process of a financial institution, the process and investment criteria of which has been approved by resolution of NPT s Investment Committee. In all other cases, the Mutual Funds and/or ETFs purchased and held in Discretionary and/or Non-Discretionary Branch Accounts must meet the following criteria: Has total assets under management of at least $75 million at the time of investment. Has been in existence for at least three years at the time of investment. Tracks a logical and/or established benchmark with performance that is consistently ranked in the first or second quartile on a three-year and, if in existence for five or more years, five-year basis relative to peers. Provides regular liquidity. Keeps expenses, such as brokerage and transaction fees and management fees, to a reasonable level commensurate with its peers. Is managed/offered by a bank, insurance company, or registered investment adviser. Manager and fund remain in good standing with the SEC and other regulators. Is managed by an experienced lead portfolio manager and/or portfolio management team with at least three (3) years experience at the time of investment. In addition to the above, ETFs must also comply with the following criteria: Is offered by an ETF provider that has been managing ETFs for at least five (5) years at the time of the investment. Does not use leverage and is not structured to trade inversely to a market index. Has an average trading volume exceeding 25,000 shares per day at the time of the investment. Is an exchange-trade fund, not an exchange-traded note. (continued on next pages) Page 3 of 5

4 c. Equities Investments in common and preferred stocks are generally restricted to readily marketable securities of issuers that are actively traded on a public securities exchange or over the counter. In addition, ownership of the shares of one issuer shall not exceed two (2) percent of those outstanding. d. Fixed Income Fixed income investments shall be high quality, marketable securities that may include investments in (1) U.S. Treasury, federal agencies and U.S. Government guaranteed obligations, and (2) investment grade corporate issues including convertibles. The rating at the time of investment of any fixed income security shall be at least investment grade, according to either Moody s, Standard & Poor s or Fitch s rating system, provided that in cases where the yield spread adequately compensates for additional risk, fixed income assets rated below investment grade can be purchased up to a maximum of 20 of the total market value of all fixed income investments. Fixed income securities of any one issuer shall not exceed 5 of the Overall Portfolio at time of purchase. This does not apply to issues of the U.S. Treasury or other Federal Agencies or U.S. Government guaranteed obligations. Active bond management is encouraged and may require transactions that will temporarily lower the return or change the maturity of the portfolio in anticipation of market changes. The position size of fixed income assets should allow for timely liquidation at a reasonable price relative to round lot trading. e. Real Estate Real estate investments may be made through a broad spectrum of investment vehicles including publicly traded Real Estate Investment Trusts ( REITs ) and/or open- or closed-end funds. f. Alternative/Private Investment Funds All alternative investment vehicles must either (1) pass a due diligence review performed by NPT s Due Diligence Consultant or (2) be an approved investment on a platform that has been approved by resolution of NPT s Investment Committee. In addition, investments in alternative funds must meet the following criteria: Commitment must be limited to no more than 10 of the investment vehicle s total assets. For vehicles that have feeder fund structures, NPT s commitment will be measured against the total assets of the master fund and all feeders. Must undergo an annual audit completed by a qualified independent auditor and provide a copy to NPT no later than June 30th of each year for the vehicle s prior fiscal year. Must provide at least a quarterly account statement. Must be valued at least annually in accordance with Generally Accepted Accounting Principles or similar standards. g. Structured Products NPT must review and pre-approve the holding of structured products regardless of an account s status of discretionary or non-discretionary. At a minimum, the following criteria will be considered: Note has a face value of less than $10,000,000. The term is less than 24 months. The issuing bank or financial institution is deemed to be Investment Grade by Moody s, S&P or Fitch. For purposes of the Compliance Statement, structured product shall mean a debt obligation, usually a bond issued by a major bank or financial institution, that also contains an embedded derivative which is designed to adjust the risk/return profile. (continued on next page) Page 4 of 5

5 h. Private Companies NPT must review and pre-approve the holding of private companies regardless of an account s status of discretionary or non-discretionary. Such investments are subject to Due Diligence and must meet the following minimum criteria: Must undergo an annual audit completed by a qualified independent auditor and provide a copy to NPT no later than June 30th of each year for the company s prior fiscal year. Must provide a valuation of the holding as of June 30th each year. i. Socially Responsible Investments Given NPT s mission to increase philanthropy in society, many donors and donor-advisors to NPT s DAFs have a strong interest in recommending socially responsible investments ( SRIs ) frequently referred to as impact investments. SRIs can be structured in many different ways, and NPT acknowledges that SRIs often will not meet the criteria for permissible investments set forth in this document and the IPG. Therefore, NPT must review and pre-approve the holding of SRIs regardless of an account s status of discretionary or non-discretionary. Such investments are subject to Due Diligence on the issuer of the investment. j. Other Permitted Transaction The use of exchange-traded/listed equity options is limited to writing covered calls and purchasing puts for hedging against a long marketable security position. Prohibited and non-compliant investments (as defined below) may be held within permissible managed products including, without limitation, mutual funds, approved alternative investment funds and separately managed accounts ( SMAs ). Prohibited and Non-compliant Investments NPT s IPG seeks to avoid investments that are classified into one of the following categories: Investments that would give rise to an excess benefit transaction or would provide a prohibited private benefit to a disqualified person, Investments in a DAF that could put the assets of other DAFs or NPT s assets generally at risk, Investments that would require NPT to incur debt, Investments that would constitute an excess business holding (as defined under Section 4943 of the Code), Investments that generate excessive unrelated business taxable income, which could put NPT s tax-exempt status at risk, and/or Investments that could be characterized as a taxable expenditure. To this end the following list of investments and transactions are not authorized and shall not be purchased, unless (1) within permissible private fund structures or separately managed accounts, or (2) they are of such type and structure as to facilitate grantmaking or otherwise further NPT s charitable mission: Commodities or commodity contracts (other than commodity-based mutual funds and ETFs) Naked short sales Margin transactions Derivatives, options, warrants or futures for the purpose of portfolio leveraging Oil, gas, or other mineral exploration or development programs or mineral leases Investments that charge a fee upon redemption back-end load or deferred sales charge where the proceeds of the redemption may not cover the fee Direct real estate investments Cryptocurrency The foregoing list is illustrative but not exhaustive. Page 5 of 5