* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Download Summary of Investment Objectives
Negative gearing wikipedia , lookup
Stock trader wikipedia , lookup
History of private equity and venture capital wikipedia , lookup
Private equity in the 1980s wikipedia , lookup
Leveraged buyout wikipedia , lookup
Private equity in the 2000s wikipedia , lookup
Internal rate of return wikipedia , lookup
Private equity wikipedia , lookup
Foreign direct investment in Iran wikipedia , lookup
Corporate venture capital wikipedia , lookup
Private equity secondary market wikipedia , lookup
Mutual fund wikipedia , lookup
Private money investing wikipedia , lookup
Investor-state dispute settlement wikipedia , lookup
Fund governance wikipedia , lookup
Early history of private equity wikipedia , lookup
Socially responsible investing wikipedia , lookup
International investment agreement wikipedia , lookup
History of investment banking in the United States wikipedia , lookup
Investment banking wikipedia , lookup
Environmental, social and corporate governance wikipedia , lookup
The Association of Healthcare Internal Auditors Investment Policy Statement DRAFT January, 2012 Introduction Mission Statement and Purpose of Funds: For the purposes of managing investment risk and to optimize investment returns within acceptable risk parameters, the Association of Healthcare Internal Auditors (AHIA) funds will be held in three investment pools called the “Operating Fund,” “Short Term Fund,” and the “Long Term Investment Fund”. To carry out the investment activities as described in this document, the responsibilities of the involved parties are described below. These parties include, but are not limited to the Budget and Finance Committee, the Board of Directors, the Investment Consultant, the Investment Managers and the Custodian. Assignment of Responsibilities Responsibility of the Finance Committee The Budget and Finance Committee is charged with the responsibility of managing the AHIA’s investable assets in accordance with its purpose and restrictions. The Budget and Finance Committee shall discharge its duties solely in the interest of the Association, with the care, skill, prudence and due diligence under the circumstances then prevailing, that a prudent person, acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character with like aims. The specific responsibilities of the Budget and Finance Committee relating to the investment management of assets include: 1. Establishing reasonable and consistent investment objectives, policies and guidelines that will direct the investment of the assets; 2. Determining the risk tolerance and investment time horizon and communicating these to the appropriate parties; 3. Prudently and diligently selecting qualified investment professionals, including Investment Manager(s), Investment Consultant(s), and Custodian(s); 4. Conveying the financial needs of the Association to the Investment Consultant on a timely basis; 5. Quarterly evaluation of the performance of all investments, including the Investment Consultant’s choice of Investment Manager(s) to assure adherence to policy guidelines and monitor investment objective progress; 6. Developing and enacting proper controls and procedures; and 7. Ensuring compliance with asset allocation targets. Responsibility of the Investment Consultant (The J.K. Meek Group) The Investment Consultant’s role is to provide investment advice concerning the investment management of the assets and will be consistent with the investment objectives, policies, guidelines and constraints as established in this statement. Specific responsibilities of the Investment Consultant(s) include: 1. Assisting in the development and periodic review of investment policy; 2. Conducting investment manager searches; 3. Providing “due diligence”, or research, on current or prospective Investment Manager(s); 4. Providing recommendations on investment managers to hire or terminate; 5. Hiring and terminating Investment Managers or Mutual Funds; 6. Monitoring the performance of the Investment Manager(s) in regard to benchmarks and peers and complete a tri-party performance reconciliation to provide the Budget and Finance Committee with the ability to determine performance and the progress toward the investment objectives; 7. Communicating matters of policy, manager research, and manager performance to the Budget and Finance Committee; 8. Monitoring the asset allocation of the Associations Long Term Fund and providing the Budget and Finance Committee with recommendations for rebalancing; 9. Reviewing investment history, historical capital markets performance and the contents of this investment policy statement with any newly appointed members of the Budget and Finance Committee and The Board of Directors. Responsibility of the Investment Manager(s) Each Investment Manager will have full discretion to make all investment decisions within the specific risk/asset framework for the assets placed under its management. Specific responsibilities of the Investment Manager(s) include; 1. Discretionary investment management including decisions to buy, sell, or hold individual securities; 2. The timely reporting of quarterly investment performance; 3. Effective management of assets with the expectation of meeting or exceed respective benchmarks and peer performance; 4. Communicating any major changes to economic outlook, investment strategy, or any other factors that affect implementation of investment process; Page 2 5. Informing the Investment Consultant of any qualitative change to the investment management organization. Examples include changes in portfolio management personnel, ownership structure, investment philosophy, etc; 6. Voting proxies, if requested by the Budget and Finance Committee, on behalf of the Board of Directors, and communicating such voting records to the Budget and Finance Committee on a timely basis. Responsibilities of the Custodian The Custodian will physically (or through agreement with a sub-custodian) maintain possession of securities owned by the Association, collect dividend and interest payments, redeem maturing securities, and effect receipt and delivery following purchases and sales. The Custodian will also perform regular accounting of all assets owned, purchased or sold, as well as movement of assets within fund accounts. The Custodian will reconcile with managers and provide related reports to the Board. Procedures 1. The following procedures will be followed to ensure the investment policy statement is consistent with the current mission of the Association and accurately reflects the current financial condition: A.) This policy statement shall be reviewed at least annually by the Budget and Finance Committee for any necessary revisions. B.) Any recommendations for revisions or modifications will be made by the Budget and Finance Committee to the Board of Directors for final approval. 2. To maintain the proper level of reserves placed in the Operating Fund (if held at MSSB), the Budget and Finance Committee, based on cash flow projections provided by the Board of Directors, will authorize transfer of funds from the Short Term Fund, Long Term Fund, or other account to the Operating Fund. 3. The services of an Investment Consultant (currently The J. K. Meek Group) may be sought to assist in the oversight of the Association’s investment assets. The following procedures shall be followed to engage a new or replace a current Investment Consultant; A.) The Budget and Finance Committee will review and recommend the hiring or replacing of an Investment Consultant. B.) The Board of Directors shall have final approval for the hiring or replacing of the Investment Consultant as recommended by the Budget and Finance Committee. 4. The services of an Investment Manager(s) will be sought to manage the Association’s investable assets. The engagement or termination of an Investment Manager will be authorized by the Board of Directors, acting with the advice of the Investment Consultant. The same procedure shall apply for both individually managed accounts and mutual funds (with the exception of money market mutual funds). Page 3 5. To remain consistent with the asset allocation guidelines established by this Investment Policy Statement, the following rebalancing procedures shall be followed: A.) It is the responsibility of the Investment Consultant to monitor the asset allocation of the Long Term Investment Fund and to make recommendations for portfolio rebalancing to the Budget and Finance Committee. B.) The Budget and Finance Committee shall have final approval for the rebalancing of the Long Term Investment Fund. 6. Meetings of the Budget and Finance Committee shall be held for such purpose(s) and at such time and place as may be determined by the Budget and Finance Committee Chairman. Notice of the time, place and purpose of a meeting shall be given at least five (5) days prior to the scheduled meeting date, either in writing or electronically. Members of the Budget and Finance Committee may attend meetings in person or participate via conference call. Decisions by the Committee will be achieved by consensus as determined by a simple majority. 7. An emergency may be declared to exist requiring prompt action and with full responsibilities on behalf of the full Budget and Finance Committee. Such emergency may be declared by the following individual(s), and in the following order of priority: (a) the AHIA’s Board of Directors; or the (b) the Budget and Finance Committee Chair. Emergency actions taken under such conditions shall be deemed as acts of the full committee and should be documented with the reasons for such action and brought to the full Budget and Finance Committee’s attention as soon as practicable. The Association of Healthcare Internal Auditors OPERATING FUND (if held with MSSB) Purpose The purpose of the Operating Fund is to provide sufficient cash to meet at least 100% of AHIA’s annual operating budget with at least 6 months operating expenses held in a ready liquid state. Investment Objectives The investment objectives of the Operating Fund are: 1. Liquidity; 2. Preservation of capital; 3. To optimize the investment return within the constraints of the policy. Investment Guidelines ALLOWABLE INVESTMENTS Page 4 The Budget and Finance Committee with notification to the Board of Directors shall be authorized to invest the Operating Liquidity Fund as follows: 1. Checking accounts in U.S. federally insured banks and savings and loans not to exceed federally insured amounts; 2. Money market funds; 3. Federally-insured certificates of deposit not to exceed the insurable limit per institution; 4. Direct obligations of the U.S. Government, its agencies and instrumentalities; 5. Repurchase agreements in conjunction with bank sweep accounts collateralized by U.S. Government obligations; 6. Commercial paper rated A-1/P-1 by Standard and Poor’s and Moody’s. MATURITY The maturities on investments for the Operating Fund shall be limited to one year or less. The Budget and Finance Committee and the Finance Committee Chair shall be responsible for scheduling maturities. Reporting The Investment Consultant shall prepare the following reports for presentation on a quarterly basis (monthly if there has been activity in the account) to the Budget and Finance Committee. 1. Schedule of investments; 2. Interest income year to date; 3. Current yield. The Association of Healthcare Internal Auditors SHORT TERM FUND Purpose The purpose of the Short Term Fund is to: 1. Meet expenses occurring as the result of unanticipated activities; 2. Improve the return on funds held for expenditure over the next one to five years; and 3. Manage investment risk. Investment Objectives The investment objectives of the Intermediate Liquidity Fund are: 1. Preservation of capital; 2. Liquidity; 3. To optimize the investment return within the constraints of the policy. Page 5 Investment Guidelines ALLOWABLE INVESTMENTS The Budget and Finance Committee with ratification of the Board of Directors shall be authorized to invest the Short Term Fund as follows: 1. Checking accounts in U.S. federally insured banks and savings and loans not to exceed federally insured amounts; 2. Money market funds; 3. Federally-insured certificates of deposit not to exceed the insurable limit per institution; 4. Direct obligations of the U.S. Government, its agencies and instrumentalities; 5. Repurchase agreements in conjunction with bank sweep accounts collateralized by U.S. Government obligations; 6. Commercial paper rated A-1/P-1 by Standard and Poor’s and Moody’s. MATURITY The maturities on investments for the Short Term Fund shall be limited to five years or less. The Budget and Finance Committee shall be responsible for scheduling maturities. Reporting The Investment Consultant shall prepare the following reports for presentation on a quarterly basis to the Budget and Finance Committee: 1. Schedule of investments; 2. Interest income year to date; 3. Current yield. Page 6 The Association of Healthcare Internal Auditors LONG TERM INVESTMENT FUND Purpose The purpose of the Association’s Long Term Investment Fund is to provide funding for current commitments, to enhance the purchasing power of funds held for future requests, to fund programs and to help provide additional income required to meet the operating needs of the Association. Investment Objectives The long term goal of the Long Term Investment Fund is to achieve appreciation of assets without exposure to undue risk, as defined herein. It is understood that fluctuating rates of return are characteristic of the securities markets. Recognizing that short-term market fluctuations may cause variations in the account performance, the portfolio is expected to achieve the following objectives, net of all fees, over a five-year moving time period: 1. In order to maintain asset levels capable of: A.) supporting desired spending; B.) providing additional growth and or income to cover operating expenses; C.) preserving the purchasing power of AHIA’s assets over time, the Long Term Investment Fund’s total return is expected to exceed the Consumer Price Index by 5%. 2. In order to receive a suitable return that is consistent with the ownership of risk assets, the Investment Fund's total return is expected to exceed the 90-Day Treasury bill Index by 5%. 3. In order to evaluate the decisions regarding manager selection and asset allocation, the Investment Fund’s total return should outperform a composite index that is a weighted blend of the indices referred to in the section entitled “Investment Guidelines” herein that reflects this policy’s target asset allocation. Understanding that a long-term positive correlation exists between performance volatility (risk) and statistical returns in the securities markets, the following short-term objective has been established: The portfolio should be invested to minimize the probability of large negative total returns, defined as a one-year return worse than -6%. It is anticipated that a loss greater than this will occur no more than one out of twenty years. Investment Guidelines The policies and restrictions presented in this Investment Policy Statement serve as a framework to achieve the investment objectives at the level of risk deemed acceptable. These policies and restrictions are designed to minimize interference with efforts to attain overall objectives and to minimize the probability of excluding appropriate investment opportunities. Page 7 Diversification The Investment Fund shall be diversified so the portfolio will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio, unless under the circumstances it is clearly prudent not to do so. Target Asset Mix The Investment Fund shall be comprised of the asset classes listed in the table below. The target weight is the desired weight for each asset class. The minimum and maximum weights are designed to allow for normal market fluctuations and to allow for temporary over/under weight allocations that are believed to be desirable by either the Budget and Finance Committee or the Investment Consultant. The Budget and Finance Committee will monitor the asset allocation of the Investment Fund based on quarterly reports provided by the Investment Consultant. It is the responsibility of the Investment Consultant to monitor the Fund on an on-going basis and to make recommendations for portfolio rebalancing to ensure that the Fund remains within Investment Policy guidelines. Summary of Asset Allocation Study August 2011: Model 3 ASSET CLASS MINIMUM WEIGHT TARGET WEIGHT MAXIMUM WEIGHT 10% 3% 15% 5% 20% 7% 14% 20% 26% 7% 3% 10% 10% 5% 15% 35% 13% 7% 20% 35% 35% 50% 50% 65% 65% 35% 50% 65% TRADITIONAL INVESTMENTS DOMESTIC EQUITY U.S. Large Capitalization Stocks U.S. Mid Capitalization Stocks TOTAL DOMESTIC EQUITY INTERNATIONAL EQUITY International Equity Stocks Emerging Markets Stocks TOTAL INTERNATIONAL EQUITY TOTAL EQUITY FIXED INCOME U.S. Intermediate Investment Grade Corp TOTAL U.S. FIXED INCOME TOTAL FIXED INCOME TOTAL TRADITIONAL INVESTMENTS 85% ALTERNATIVE INVESTMENTS ALTERNATIVE INVESTMENT STRATEGIES TOTAL 10% 15% 20% 100% Page 8 Traditional Investments US Large Capitalization Stocks: A portfolio of stocks composed primarily of US-based companies having a market capitalization, on average, exceeding $10.0 billion and whose primary shares trade on a major US exchange. The generally accepted, nationally recognized index for this asset class is the Standard & Poor’s 500 Stock Index (S&P 500)*. US Mid Capitalization Stocks: A portfolio of stocks composed primarily of US-based companies having a market capitalization, on average, between $2.0 billion and $10.0 billion and whose primary shares trade on a major US exchange. The generally accepted, nationally recognized index for this asset class is the Russell Midcap Index. US Small Capitalization Stocks: A portfolio of stocks composed primarily of US-based companies having a market capitalization, on average, less than $2.0 billion. The generally accepted, nationally recognized index for this asset class is the Russell 2000 Index. International Stocks: A portfolio of stocks composed primarily of non-US-based companies whose primary shares trade on a non-US exchange. American Depositary Receipts (ADRs) are considered international stocks. The generally accepted, nationally-recognized index for this asset class is the Morgan Stanley Capital International Europe-Australasia-Far East Index (EAFE). Emerging Markets: A portfolio of stocks composed primarily of companies in the global emerging markets of Europe, Asia, Africa and Latin America. The generally accepted, nationally, recognized index for this asset class is the MSCI Emerging Markets Index. (MSCI EM) Fixed Income Investments Intermediate-term Government/Corporate Bonds: A portfolio consisting primarily of fixed income securities rated investment grade or better having a weighted average maturity of less than 10 years. The portfolio also may include, but is not limited to, other fixed income investments such as investments in Treasury Inflation Protected Securities (TIPS), International Bonds and Non-Investment Grade Corporate securities. The generally accepted, nationally recognized index for this asset class is the Barclays Capital Government/Corporate Intermediate-term Bond Index. Alternative Investments Investment in alternatives may be considered by the Association within the context of an overall investment plan. The objective of such investments will be to seek to diversify the portfolio, complementing traditional equity and fixed-income investments and improving the overall performance consistency of the portfolio. It is acknowledged that there is no guarantee that this objective will be realized. * Index references that are included in the definition section of this document relate to the broad asset classes as defined in the target asset allocation table and which are used in the calculation of the composite index. Individual portfolio managers will be compared to a unique style specific index that most appropriately reflects their investment mandate. Examples would include, but are limited to the Russell 2000 Value index and the Russell 1000 Growth Index. Page 9 Alternative investments, including hedge funds, managed futures, commodities, private equity, private real estate and other non-traditional investments, shall be utilized through mutual funds or professionally managed pools of such investments to provide for a prudent level of diversification. Investment Manager Selection and Evaluation Criterion Investment Manager Selection In selecting the investment managers for the Long Term Investment Fund, the Budget and Finance Committee will consider a variety of statistical and non-statistical factors. These factors, measured over a multi-year period, will include the investment manager’s investment objectives, performance relative to its index and peer group, risk characteristics, return characteristics, investment style, manager tenure and turnover, style consistency and the degree of correlation with other fund investment managers. Investment Manager Monitoring and Review The on-going monitoring of investment options must be a regular and disciplined process. It is the mechanism for revisiting the investment manager selection process and confirming that the criteria originally selected remain so, and that an investment manager continues to be a valid offering. While frequent change is neither expected nor desirable, the process of monitoring investment performance relative to specified guidelines is an on-going process. The Budget and Finance Committee will monitor, on a periodic basis, the same factors identified above under “Investment Selection”. The placement of a manager on a “watch list” may be required if an investment manager: 1. has a change in manager or analytical staff; 2. has experienced style drift; 3. has performed unfavorably on an absolute basis relative to its index or peer group over rolling five year periods; 4. has performed unfavorably on a risk adjusted basis relative to its index or peer group over rolling five year periods; 5. violated the AHIA’s’s investment policy guidelines; 6. has material litigation filed against the firm; 7. has material changes in firm ownership structure; 8. has exhibited any other factors that the Finance Committee or the Investment Consultant deems material since the initial selection of the investment option. Watch list status is expected to last no longer than one quarter and will be used to evaluate the factors that led to the watch list designation. If, at the conclusion of the watch list evaluation, the Budget and Finance Committee has overall satisfaction with the investment manager, no further action is required. If areas of dissatisfaction exist, it is the responsibility of the Budget and Finance Committee, working with the Investment Consultant, to consider taking steps to remedy the deficiency up to and including the removal of the investment manager. Page 10 Investment Manager Removal The Budget and Finance Committee, working with the Investment Consultant may remove an investment manager when they believe such removal is in the best interest of the Investment Fund, taking into account for this purpose all relevant factors including, and without limitation, when the Budget and Finance Committee has lost confidence in the investment manager’s ability to: 1. Achieve performance and risk objectives; 2. Comply with investment guidelines; 3. Maintain a stable organization and retain key relevant investment professionals. An investment manager’s consistent failure to adhere to one or more of the above conditions and failure to remedy the circumstances, within a reasonable time, may be grounds for termination. The watch list is not the only route for removing an existing manager. The aforementioned events, or any other events of concern identified by the Budget and Finance Committee or the Investment Consultant, may prompt the immediate removal of a manager without it being watch listed. Any decision to remove an investment manager will be treated on an individual basis, and will be made based on quantitative and qualitative review. Performance Reporting The Investment Fund will be evaluated quarterly on a total return basis. Returns will be compared to: 1. The increase in the Consumer Price Index plus 5%; 2. The Ninety-day Treasury Bill Index plus 5%; 3. Nationally recognized indices measuring performance of the classes specified in the target asset mix. Comparisons will show risk and return performance statistics for the latest quarter, year-to-date, 3 years, 5 years, 10 years and since inception. The report will be prepared by the Investment Consultant and will be presented to the Finance Committee. Notes and History for this Investment Policy Statement This policy was originally adopted by the AHIA’s Board of Directors on ___________ and revised thereafter. This revised version of the policy was adopted by the AHIA’s on ______________. Adoption of this Investment Policy Statement for the Association is acknowledged by: Executive Director, Association of Healthcare Auditors Date Page 11