P.O. Box 6096 Nacogdoches, TX 75962 REQUEST FOR PROPOSAL for Investment Management Services RFP NUMBER IMS-2016 PROPOSAL MUST BE RECEIVED BEFORE: 5:00 PM, TUESDAY, OCTOBER 11, 2016 MAIL PROPOSAL TO: HAND DELIVER AND/OR EXPRESS MAIL TO: Stephen F. Austin State University Stephen F. Austin State University Alumni Association Alumni Association P.O. Box 6096, SFA Station 300 Vista Nacogdoches, TX 75962 Nacogdoches, TX 75961 NOTE: PROPOSAL must be time stamped at Stephen F. Austin State University Alumni Association before the hour and date specified for receipt of proposal. REFER INQUIRIES TO: Craig Turnage Stephen F. Austin State University Alumni Foundation 936.468.3407 email: turnagecraig@sfasu.edu
1. STATEMENT OF WORK REQUEST FOR PROPOSAL INVESTMENT MANAGEMENT SERVICES 1.1. General Description: Stephen F. Austin State University Alumni Association (Alumni Association) is seeking proposals for investment management and advisory services of their investments beginning February 1, 2017. The total value of the investment assets as of June 30, 2016 is approximately $1.58 Million. The assets contained in the entity s portfolio will be invested in accordance with its specific investment policy. A summary of the current portfolio as well as special services required is presented below. In thousands 06/30/2016 Percent of Total Managed Equities $ 788 50% Managed Mutual Funds $ 313 20% Managed Fixed Income $ 232 15% Money Market Assets $ 247 15% Total $ 1,580 100% Investment policy statement: The Alumni Association investment policy must be adhered to and a copy may be found in EXHIBIT A Investment Policy. 2. PROJECT TIME TABLE Deadline for RFP Questions September 23, 2016 Deadline for Answering RFP Questions September 30, 2016 5:00 PM Proposals Due October 11, 2016 5:00 PM Board Decision Made October 28, 2016 3. SCOPE OF SERVICES 3.1 Overview: Generally, the Investment Manager will provide all services necessary to satisfy the investment function of the Alumni Association. Services will include purchase and sale of securities, custodial maintenance and monthly statement reporting of securities, performance reporting, quarterly reporting, custom reporting, ad hoc reporting, and internet account access and transaction capability. Additionally, the investment manager shall make timely Page 2
recommendations regarding any changes to asset allocations or otherwise as considered important to its success and mission. Institutional funds shall be managed in accordance with Texas Title 10, Chapter 163, Management Investment and Expenditure of Institutional Funds Act (Uniform Prudent Management of Institutional Funds Act (UPMIFA)). 3.2 Accounts required: An investment firm must establish a primary account for the Alumni Association, including the capability to separate the account into subsidiary accounts. 3.3 Financial and Performance Reporting: Monthly financial reports and quarterly performance reports are required. Financial reporting by account with internet access and transaction capability is required. Periodic reports must be made in person as required by the Alumni Association board. The firm must also present an annual report on portfolio performance and general economic conditions. 3.4 Web site: Ability to review investments on a web site is necessary. 3.5 Special Services: Ability to prepare custom financial reports is required. Quarterly conference call with the finance committee is required. 4. SFA ALUMNI ASSOCIATION CONTACT INFORMATION 4.1 All questions regarding the RFP or response must be forwarded to the Executive Director of Alumni Relations: Craig Turnage P.O. Box 6096, SFA Station Nacogdoches, TX 75962 Phone: 936.468.3407 Fax: 936.468.1007 Email: turnagecraig@sfasu.edu 4.2 All questions should be submitted in writing (email) to turnagecraig@sfasu.edu. The deadline for submitting questions related to this RFP is Friday, September 23, 2016. Page 3
5. EVALUATION AND RECOMMENDATION Evaluation will include a comprehensive review and analysis of criteria below. The evaluation will be performed by a committee of the Alumni Association. The selection process will be made based on which proposal represents the best value to the Alumni Association. Submission of a proposal represents concurrence with this method of evaluation and award. Furthermore, respondents will not, under any circumstances, dispute any award made using this method. A recommendation for award will be presented to the board in October. By submitting a response, Respondent accepts that best value will be solely determined by the board, and the original evaluation criteria will be used in making the final decision. The review will consist of the following items: 1. Experience of the firm in managing nonprofit investments, 2. Proposed investment strategy, 3. Cost of all expenses associated with investment management services, 4. Performance reporting capability, 5. Experience in periodic, custom, and ad hoc reporting, 6. Internet transaction and custom report services, 7. References directly associated with investment management, 8. Qualifications and biographical data of personnel who will be actively involved, 9. Firm size and financial capability to insure ability to provide services as requested, 10. Supplemental insurance coverage in excess of the SIPC limit, and 11. Audited financial reports for the previous report period. 6. SUBMITTAL INSTRUCTIONS Each respondent must submit at least one original proposal, five copies, and one copy on CD in a sealed envelope labeled RFP IMS-2016. 6.1 REQUIRED SUBMITTALS Failure to provide the required information with the bid response will automatically disqualify the bid from consideration for award in connection with this transaction. Page 4
EXHIBIT B FIRM INFORMATION EXHIBIT C ACKNOWLEDGEMENT OF ADDENDA, IF ANY ***** Please Include the Following Minimum Information in the Proposal ***** 6.2 FIRM FINANCIAL INFORMATION: Include the firm s audited financial reports for the most recent period available. 6.3 LOCATION: Indicate the location of the office of the principal who will be assigned to this account. 6.4 FIRM QUALIFICATIONS: 6.4.1 Provide any nonprofit investment management experience. 6.4.2 Identify key individuals to be assigned to this account and provide their biographies. How many other client accounts are assigned to these key individuals and what are the asset values of these accounts? 6.4.3 Please explain in detail any potential conflict of interest that might be created by your firm s representation of Stephen F. Austin State University Alumni Association. 7. PROPOSAL RESPONSE 7.1 With the facts represented in Section 1, please describe your proposed investment strategy. 7.2 Briefly describe the investment philosophy for this strategy and the process through which it is implemented. 7.3 Provide past performance data for the investments recommended with this strategy (three, five, and ten-year averages). Include respective benchmark data. Page 5
7.4 Outline your process for maintaining and providing a continuous review of asset allocation and portfolio structure. 7.5 Describe your process for monitoring and reporting on market trends and include the time frame for performance reporting. 7.6 Provide a sample monthly report, performance report, and ad hoc report based on the entity s asset allocation. 7.7 Describe capability to provide internet reporting. 7.8 Describe your firm s experience and capability in performing asset allocation studies and how often this would occur. 7.9 Describe your firm s experience and capability for assessing an investment manager s performance. 7.10 Besides investment returns, list any qualifications that are considered in your overall evaluation of an investment manager. 7.11 Describe how benchmarks are chosen or developed and how performance is compared to similar portfolios. 7.12 Explain how the team dedicated to these accounts would function, including lead person, backup, quality control, and support services. 7.13 Confirm commitment to attend all required board presentations. 8. FEES As stewards of funds that promote higher education student success at Stephen F. Austin State University, the Alumni Association board wishes to maximize risk-adjusted net investment return. All fees must be disclosed in the categories below, no incremental custodial or management fee will be charged: Page 6
Basis Points (bps) assessed for: Cash/Money Market position up to a maximum of 100% of portfolio: Managed Equity Position up to a maximum of 70% of portfolio: Managed Fixed Income Position up to a maximum of 60% of portfolio: Alternative Investments up to a maximum of 15% of portfolio: 9. LEGAL 9.1 Is your firm registered as an investment advisor with the Securities and Exchange Commission? Does your firm carry an errors and omissions policy? If yes, at what limit(s)? 9.2 Have there been any claims against this policy? If so, please explain. 9.3 Is your firm a member of SIPC? 9.4 Does your firm carry insurance coverage on accounts in excess of the SIPC limits? If so, please state the coverage limits and identify the insuring firm and its rating. 9.5 Has your firm, or a principal of your firm, ever been charged by the SEC or any other regulatory agency of any violation of applicable law? If yes, please explain. Page 7
EXHIBIT A INVESTMENT POLICY STEPHEN F. AUSTIN ALUMNI ASSOCIATION STATEMENT OF INVESTMENT POLICY AND OBJECTIVES Effective July 26, 2013 Investment Program Policy The investment program shall invest according to an asset allocation plan that is designed to meet the goals of the Fund. The plan will be based on a number of factors, including: The projected spending needs; The maintenance of sufficient liquidity to meet spending payments; and The return objectives and risk tolerances of the Fund. This asset allocation plan provides for diversification of assets in an effort to maximize the investment return and manage the risk of the Fund consistent with market conditions. Due to the fluctuation of market values, allocations within a specified range constitute compliance within the Policy. An extended period of time may be required to fully implement the asset allocation plan, and periodic revisions may be required. Investment Program Strategy The Fund shall be allocated across a number of investment classes to provide diversification and achieve the Fund s objectives. The following table defines the Fund s targeted asset allocation and range for each asset class: ASSET CLASS Target Asset Allocation Table MINIMUM WT. TARGET MAXIMUM WT. REPRESENTATIVE INDEX Equity Securities 30% 55% 70% Public Equities 30% 70% S&P 500 International Equities 10% 30% MSCI World Ex US Emerging Markets 0% 15% MSCI EMF Hedged Equity 0% 20% S&P 500 Fixed Income Securities 20% 30% 60% Cash & Cash Equivalents 1.5% 10% 100% Alternatives 0% 5% 15% Absolute Return 0% 15% Various Natural Resources 0% 15% Various Real Estate 0% 15% NCREIF Property Index Page 8
Investment Management Policies, Guidelines, and Restrictions The investment policies, guidelines, and restrictions in this policy statement are a framework to help the Fund and its Investment Manager(s) achieve the investment objectives at a level of risk deemed acceptable. The Fund will be diversified both by asset class and within asset classes. Within each asset class, securities will be diversified among economic sector, industry, quality, and size. The purpose of diversification is to provide reasonable assurance that no single security or class of securities will have a disproportionate impact on the performance of the total fund. As a result, the risk level associated with the portfolio investment is reduced. Equity Securities The purpose of equity investments, both domestic and international, in the Fund is to provide capital appreciation, growth of income, and current income. This asset class carries the assumption of greater market volatility and increased risk of loss, but also provides a traditional approach to meeting the portfolio total return goals. This component includes domestic and international common stocks, American Depository Receipts (ADRs), preferred stocks, Exchange Traded Funds (ETFs), and convertible stocks traded on the world s stock exchanges or over-thecounter markets. Public equity securities shall generally be restricted to high quality, readily marketable securities of corporations that are traded on the major stock exchanges including NASDAQ and have the potential for meeting return targets. Equity holdings must generally represent companies meeting a minimum market capitalization requirement of respective asset class profiles with reasonable market liquidity where customary. Decisions as to individual security selection, number of industries and holdings, current income levels, and turnover are left to broad manager discretion subject to the standards of fiduciary prudence. However, no single major industry shall represent more than 20 percent of the Fund s total market value, and no single security shall represent more than 5 percent of the Fund s total market unless approved by the Committee. Within the above guidelines and restrictions, the Investment Manager(s) has complete discretion over the timing and selection or sale of equity securities. Fixed Income Securities Domestic and international fixed income investments provide diversification and a dependable source of current income. Diversification within fixed income investments will be flexibly allocated among maturities of different lengths according to interest rate prospects and the goals of the Fund. Fixed income instruments should reduce the overall volatility of the Fund s assets and provide a deflation or inflation hedge where appropriate. Fixed income includes Page 9
both the domestic fixed income market and the markets of the world s other developed economies. It includes, but is not limited to, U. S. and private corporate debt, mortgages and asset-backed securities, and non-investment grade debt. Fixed income also includes, but is not limited to, money market instruments such as commercial paper, certificates of deposit, time deposits, bankers acceptances, repurchase agreements, and U. S. Treasury and agency obligations. The Investment Manager(s) must take into account credit quality, sector, duration, and issuer concentrations in selecting an appropriate mix of fixed income securities. Investments in fixed income securities should be managed actively to pursue opportunities presented by changes in interest rates, credit ratings, and maturity premiums. Within the above guidelines and restrictions, the Investment Manager(s) has complete discretion over timing the sale, purchase, and selection of fixed income securities. Cash And Equivalents The Investment Manager(s) may invest in the highest quality commercial paper, repurchase agreements, treasury bills, certificates of deposit, and money market funds to provide income, liquidity for expense payments, and preservation of the Fund s principal value. No more that 5 percent of the Fund s total market value may be invested in the obligations of a single issuer with the exception of the U. S. Government and its agencies. Cash reserves that are not invested shall be kept to a minimum since short-term, cash equivalent securities are usually not considered an appropriate investment vehicle for longterm investments. However, such vehicles are appropriate as a depository for income distributions from longer term investments, or as needed for temporary placement of funds directed for future investment to the longer term capital markets. Also, such investments are the standard for contributions to the current fund or for current operating cash. Within the above guidelines and restrictions, the Investment Manager(s) has complete discretion over timing the purchase, sale, and selection of cash equivalent securities. Alternatives Covered Call Writing Investments may include publicly traded stocks with call options available to sell to bring in premiums. The objective is to sell stock at a higher price at a predetermined date of which the premium pays for that right. Page 10
Absolute Return Investments may include Market Neutral Funds or Long Short Hedge Funds. Such investments must be made through funds offered by professional investment managers. Natural Resources Investments may include oil, gas, and timber investments held in the form of professionally managed, pooled limited partnership investments. Such investments must be made through funds offered by professional investment managers. Real Estate Investments may include equity real estate held in the form of professionally managed, income producing commercial and residential property. Such investments may be made only through professionally managed, pooled real estate investment funds as offered by leading real estate managers with proven track records. Restrictions The Finance Committee may waive or modify any of the restrictions in these guidelines in appropriate circumstances. Any such waiver or modification will be made only after a thorough review of the Investment Manager(s) and the investment strategy involved. An addendum supporting such investments will be maintained as a permanent record of the Investment Committee. All waivers and modifications will be reported to the Board of Governors at the meeting immediately following the granting of the waiver or modification. Any investment that is made in a mutual fund and/or commingled fund will be reviewed and approved by the Investment Committee on a case-by-case basis and if approved, may vary from this policy. For mutual and other commingled funds, the prospectus or Declaration of Trust documents of the fund(s) will govern the investment policies of the fund investments. While the Investment Committee understands that such funds have their own stated guidelines in principle and spirit, those guidelines should be similar in nature to the guidelines stated above and cannot be changed for individual investors. To the extent that a fund allows any or all of the above stated restrictions, the Investment Committee must be aware of their possible use and be confident that the Investment Manager(s) thoroughly understands the risks being taken, has demonstrated expertise in their usage of such securities, and has guidelines in place for the use and monitoring of those securities. Timing Unless otherwise modified by the finance committee, this statement of investment policy and objectives will remain in full force and effect for the twelve (12) months period commencing upon the effective date listed above. Page 11
EXHIBIT B FIRM INFORMATION In compliance with this RFP, and subject to all the condition herein, the undersigned offers and agrees to furnish any or all commodities or services and to comply with all terms, conditions, and requirements set forth in the RFP documents and contained herein. By signature hereon, Respondent affirms that he/she has not given, offered to give, nor intends to give at any time hereafter any economic opportunity, future employment, gift, loan, gratuity, special discount, trip, favor, or service to a public servant in connection with the submitted Qualifications. Failure to sign the response, or signing it with a false statement, shall void the submitted response or any resulting contracts, and the Respondent may be removed from all bid lists. By the signature hereon affixed, the Respondent hereby certifies that neither the Respondent nor the firm, corporation, partnership, or institution represented by the Respondent or anyone acting for such firm, corporation, or institution has violated the antitrust laws of this State or the Federal antitrust laws nor communicated directly or indirectly the response made to any competitor or any other person engaged in such line of business. By signature hereon, Respondent certifies that if a Texas address is shown as the address of the Respondent, Respondent qualifies as a Texas Resident Bidder as defined in Rule 34 TAC 20.38. Certifications: Texas Family Code Child Support Certification. By signature hereon, Respondent certifies as follows: Under Section 231.006, Texas Family Code, the Contractor certifies it is not ineligible to receive the payments specified in the Agreement and acknowledges that this Agreement may be terminated and payment may be withheld if this certification is inaccurate. Sales Tax Certification. By signing the Agreement, the Respondent certifies as follows: Under Section 2155.004, Texas Government Code, the Contractor certifies that the individual or business entity named in this Agreement is not ineligible to receive the specified contract and acknowledges that this contract may be terminated and payment withheld if this certification is inaccurate. Franchise Tax Certification. By signing the Agreement, a corporate or limited liability company, Respondent certifies that it is not currently delinquent in the payment of any Franchise Taxes due under Chapter 171 of the Texas Tax Code, or that the corporation or limited liability company is exempt from the payment of such taxes, or that the corporation or limited liability company is an out-of-state corporation or limited liability company that is not subject to the Texas Franchise Tax, whichever is applicable. Contractor acknowledges and agrees that if this certification is false or inaccurate, at University s option, the Agreement may be terminated and payment withheld. Payment of Debts to the State of Texas. That pursuant to Section 403.0551, Texas Government Code, the Respondent agrees that any payments owing to the Contractor under this contract may be applied towards any debt or delinquent taxes that the Contractor owes the State of Texas or any agency of the State of Texas, until such debt or delinquent taxes are paid in full. The person signing the Response should show title or authority to bind his/her firm in contract. Federal Employer s Identification Number: Sole Owner should also enter Social Security No.: Respondent/Company: Signature (INK): Name (Typed/Printed): Title: Street: City/State/Zip: Telephone No/Fax No.: Email: THIS SHEET MUST BE COMPLETED, SIGNED, AND RETURNED WITH RESPONDENT S PROPOSAL. FAILURE TO SIGN AND RETURN THIS SHEET MAY RESULT IN THE REJECTION OF YOUR RESPONSE. Page 12
EXHIBIT C ACKNOWLEDGEMENT OF ADDENDA Receipt is hereby acknowledged of the following addenda to this RFP. Addenda No. Addenda No. Addenda No. Addenda No. Dated Dated Dated Dated Respondent/Company: Page 13