Investment Policy Formulation and Monitoring

Investment Policy Formulation

Our investment committee strictly adheres to our investment policy. This standard is also how managers are directed to make investment decisions. This doctrine is what trustees rely on as the strategic course of action. All changes to the investment policy requires consensus from all stakeholders, always keeping in mind the mission.

We recommend an investment policy include:

  • Detail pertaining to the implementation of the Investment Strategy
  • A framework of asset styles and their dollar weighted proportions to be maintained as a percentage of the total portfolio
  • Detail of the duties and responsibilities of all of the parties involved
  • Definition of the asset allocation and the mechanics of rebalancing the allocations
  • Definition on the due diligence criteria for selecting managers under each style
  • Definition of the monitoring criteria for the managers and other vendors
  • Procedures for the control and accounting of investment expenses
  • Appropriate limitations on the investments carried out by the managers

Monitoring the Manager

The Investment Policy Statement (IPS) is the essence from which the investment committee operates.

Style Breadth / Rationalization:

As markets evolve and develop, some styles may emerge with risk / return profiles that may beneficially complement the overall asset style mix represented. In these cases we may recommend a broadening of the styles that comprise the plan.

Benchmark - Performance Adjustments:

One core aspect of the policy is the setting of the benchmark and performance expectations of specific styles mandated by the plan. In the case where the markets have evolved and an adjustment to the benchmark indication or performance expectation is required we will explicitly set our recommendations in light of macro structural changes that mandate these adjustments. In the case where market structure changes so as to make the benchmark inappropriate to the style we will recommend other benchmarks that will represent a proper comparative to the style being managed.

An automatic client investment review commences on an annual basis.

Utilizing current market expectations and asset style correlations, we forward test current allocations utilizing Monte Carlo modeling in order to predict future likelihood of the achievement of the Investment Policy's stated goals. The current allocation merits no change if the achievement of investment goals remains more than 70-80%. We flag our clients for attention to potential problems if the current allocation forward tests a poor likely outcome.