Download Long-Term Investment Policy - American Speech

Financial Planning Board
Long-Term Investment Policy
Effective April 2016
TABLE OF CONTENTS
I.
PURPOSE AND SCOPE .................................................................................................. 1
II.
RESPONSIBILITIES ....................................................................................................... 1
III.
ADMINISTRATIVE AND REVIEW PROCEDURES ................................................. 3
IV.
REPORTS .......................................................................................................................... 4
V.
INVESTMENT OBJECTIVES ....................................................................................... 4
VI.
ASSET ALLOCATION AND BENCHMARKS ............................................................ 4
VII.
PORTFOLIO PROCEDURES ........................................................................................ 5
VIII. ALLOWABLE INVESTMENTS .................................................................................... 6
IX.
PROHIBITED INVESTMENTS ..................................................................................... 7
X.
PROHIBITED TRANSACTIONS .................................................................................. 8
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I.
PURPOSE AND SCOPE
The American Speech-Language-Hearing Association (ASHA) is a 501(c)(6) not-for-profit
organization that began its operations in 1925. ASHA is the national professional, scientific, and
credentialing association for 186,000 members and affiliates who are audiologists; speech-language
pathologists; speech, language, and hearing scientists; audiology and speech-language pathology
support personnel; and students. ASHA is a not-for-profit entity recognized as a 501(c)(6)
organization by the Internal Revenue Service. Currently, investment income of not-for-profit entities
is specifically excluded from income taxation.
This Investment Policy Statement (IPS) reflects the governing policy for the investment of the longterm assets of ASHA (hereafter, the “Fund”). In general, the purpose of this IPS is to outline a
philosophy and attitude that will guide those charged with the responsibilities outlined below for the
investment management of Fund assets toward the desired results. It is intended to be sufficiently
specific to be meaningful, yet flexible enough to be practical. Those charged with responsibilities
under this IPS will exercise prudent and appropriate care in accordance with law and will have
fiduciary responsibility to make investment decisions and take actions that are in the best interest of
ASHA.
The principal objectives of this policy are as follows:
1. Outline the administrative procedures and the responsibilities of all involved parties in the
management of the Fund.
2. Provide a clear understanding of the investment goals and objectives of Fund assets.
3. Establish the relevant investment horizon and asset allocation strategies by which Fund assets
will be managed.
4. Provide guidance and limitations regarding the investment of Fund assets.
5. Provide a basis for evaluating Fund investment results.
II.
RESPONSIBILITIES
The ASHA Board of Directors (hereafter, the “Board”) is responsible for this IPS by establishing
the Investment Objectives for the Fund and for defining management responsibilities and authorities
for the administration of this IPS.
The ASHA Financial Planning Board (hereafter, the “FPB”) is responsible for ensuring that
appropriate policies governing management of the portfolios are in place and that they are
implemented and monitored. More specifically, responsibilities include the following:
1. Identifying the purposes and objectives of the Fund and establishing investment policies and
an appropriate asset allocation for Fund assets, all for submission to the Board for approval.
2. Selecting/terminating the Investment Advisor, managers, allowable investments, and
custodians, as necessary to meet objectives of the Fund.
3. Setting performance objectives and monitoring performance of the Fund.
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4. Annually reviewing the investment policy and recommending changes for reaffirmation by
the Board.
The ASHA Staff (hereafter, the “Staff”) is responsible for implementing investment processes and
policies as directed by the Board and the FPB. These responsibilities include the following:
1. Working directly with the Investment Advisor.
2. Compiling information on investment returns, performance, and policy compliance for FPB
review.
3. Overseeing the day-to-day operations of the Fund.
4. The chief executive officer (CEO) and her/his designee will have signature authority to enter
into investment management and other agreements relative to the administration of the Fund
that have been approved by the FPB.
The Investment Advisor is responsible for the following tasks:
1. Working with the Staff and assisting the FPB in setting investment objectives, asset
allocation targets, and investment constraints.
2. Providing ongoing evaluations and recommending the hiring, retaining, and/or terminating of
investment service vendors (i.e., Investment Managers, Mutual Funds, Custodians, etc.).
3. Providing investment performance and risk measurement analysis against pre-established
objectives and reporting to the Staff and FPB in an accurate and timely fashion.
4. Evaluating the efficiency of the Funds’ investment and portfolio structures.
5. Benchmarking fees paid against established benchmarks.
6. Providing ongoing evaluation of the suitability of the investment managers and custodians.
7. Assisting the Staff in the day-to-day oversight of the Fund.
8. Proactively providing advice and counsel to the Staff and the FPB.
9. Reconciling Investment Manager and other performance and balancing reports with those
provided by the Custodian and other outside sources.
The Investment Manager(s), if utilized, will be responsible for the following tasks:
1. Implementing the policy strategy for the asset class under management as directed by the
FPB.
2. Adhering to the investment guidelines of this policy.
3. Achieving the performance objectives as described in this policy.
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The Custodian has the following responsibilities:
1. Providing safekeeping of invested assets.
2. Collecting income and proceeds for the assets under its control.
3. Assisting in the timely and accurate filings of all corporate actions involving the assets under
its control.
4. Providing timely and accurate accounting statements for the assets under its control.
III. ADMINISTRATIVE AND REVIEW PROCEDURES
1. Based on the recommendation(s) of the Investment Advisor, the FPB shall select one or more
Allowable Investments or Investment Managers.
2. The Investment Advisor shall meet as necessary with the ASHA Staff, but no less than quarterly,
to review investment results and policy compliance as well as to share the capital markets
outlook and other factors to be considered in achieving the Investment Objectives.
3. All funds must be invested with the care, skill, and diligence that a prudent person acting in this
capacity would exercise to comply with all objectives outlined herein.
4. Investment Managers shall select investments that conform to this policy and report their
portfolio activity, performance, and other requested statistics to the Investment Advisor and the
ASHA Staff quarterly, or as otherwise directed by the FPB.
5. Investment managers shall work to obtain reasonable transaction costs consistent with prudent
management and annually provide a market benchmark report to the Investment Advisor.
6. The Investment Advisor will evaluate the performance of the Investment Managers and other
Allowable Investments quarterly to review whether the investment objectives of the Fund are
being achieved as measured against established (asset class–specific) market benchmarks.
7. ASHA recognizes that performance is appropriately measured over 3- and 5-year market
cycles—not necessarily annually.
8. The FPB will review the status and performance of the Fund assets at least semiannually.
9. The FPB reserves the right to terminate the Investment Advisor, any Investment Manager, or any
Allowable Investment at any time, with or without cause.
10. Should an Investment Manager believe that the constraints outlined in this policy will hamper
their ability to achieve the Investment Objectives, the Investment Manager should request
modifications or exceptions (temporary or otherwise) in writing to the FPB when they deem it
appropriate. Only the FPB may approve such requests.
11. The FPB will report to the Board at least annually on the status of the Fund.
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IV. REPORTS
The Investment Advisor will provide timely and accurate quarterly reports to the FPB. These reports
will contain adequate information from which to determine whether the Funds are meeting their
performance objectives while remaining within the risk parameters of this policy and its guidelines.
Other reports will be provided as requested/necessary.
V.
INVESTMENT OBJECTIVES
1. Operate with the understanding that long-term growth of principal while avoiding excessive risk
is primary. Short-term volatility will be tolerated inasmuch as it is consistent with the volatility of
the comparable market index.
2. Meet or exceed the market index, or blended market index, selected and agreed upon by the FPB
that most closely corresponds to the style of investment management over 3- and 5-year rolling
market cycles measured quarterly.
3. Display an overall level of risk in the portfolio that is consistent with the risk associated with the
benchmark specified in the asset allocation table below. Risk will be measured by the standard
deviation of quarterly returns and/or by any other measures as determined by the FPB.
4. Understand that risk is present in all types of securities and investment styles, and use reasonable
and prudent efforts to control risk to ensure that the risk assumed is commensurate with the given
investment style and objective.
VI. ASSET ALLOCATION AND BENCHMARKS
The Fund Asset Allocation is shown in the table below. The policy benchmark for measuring
comparative performance and risk will be the weighted sum of a combination of the target allocations
listed in the table with the corresponding index return for each period.
Target Asset
Mix
Allocation
Range
Benchmark
– Large Cap Equity
40%
30%–50%
S&P 500
– Small/Mid Cap Equity
10%
0%–20%
Russell 2000
International Equity
10%
0%–20%
MSCI ACxUS
Real Return
8%
0%–15%
CPI + 4%
Fixed Income
31%
20%–60%
Barclays Intermediate Aggregate
Cash
1%
0%–10%
90-Day T-Bills
Asset Class
US$ Equities
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VII. PORTFOLIO PROCEDURES
1. Fiduciary Standards: The assets of the portfolios shall be invested in a manner that is consistent
with generally accepted standards of fiduciary responsibility. The safeguards that would guide a
prudent investor will be observed. All transactions that utilize the assets of the portfolios will be
undertaken for the sole benefit of ASHA.
2. Securities Trading: It is understood that all trading must be done at best execution for the
benefit of the Fund at the lowest institutional trading rates applicable.
3. Rebalancing Procedures and Cash Flow Management: The Investment Advisor is responsible
for monitoring manager allocations and recommending rebalancing of manager allocations, as
necessary. Rebalancing activities to maintain the structural allocations among the asset
classes/managers will be completed in a manner so as to minimize the cost to the Fund.
4. Liquidity: To minimize the possibility of a loss occasioned by the sale of a security forced by
the need to meet a required need, the Staff will periodically review and report on expected net
cash flow into/from the Funds.
5. Social Responsibility: ASHA’s investment manager(s) are encouraged to invest in socially
responsible companies.
6. Impermissible Investments: Managers are not allowed to invest in companies where a
substantial amount of total revenue is raised through the production or sale of tobacco or tobaccobased products.
7. Proxy Voting: Investment Managers are expected to vote proxies after careful assessment of the
issues involved and consistent with the mission of ASHA. Managers may outsource proxy voting
to a recognized and established service provider.
8. Ethics: Investment Advisors and Investment Managers are expected to adhere to the Chartered
Financial Advisor (CFA) Institute Code of Ethics and Standards of Professional Conduct, as
presented in the Standards of Practice Handbook. Investment Managers are expected to notify
the CEO of ASHA and the Investment Advisor in the event of any regulatory action—or
litigation that is material or a matter that could become material—that is brought against the firm
or any key manager of the firm. The Investment Manager is expected to notify the Investment
Advisor in the event that there are any material changes to the management, people, or structure
of the organization (i.e., ownership changes, key personnel changes).
9. Mutual Funds/Exchange-Traded Funds/Commingled Vehicles: It is understood that in the
case of any investment in these types of “funds,” the prevailing prospectus will supersede those
of the Fund. It will be the responsibility of the Investment Advisor to recommend funds that are
similar to the spirit of this policy and to monitor and inform the FPB regarding any changes to
these funds.
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VIII. ALLOWABLE INVESTMENTS
1. Cash Equivalents
a.
b.
c.
d.
Interest-bearing checking accounts at insured commercial banking institutions
Interest-bearing savings accounts at insured commercial banking institutions
Certificates of deposit at insured commercial banking institutions
Money market funds
2. Fixed Income Securities
a. The minimum average credit quality of each manager’s portfolio will be A2 (as
represented by Moody’s) or A (as rated by Standard and Poor’s).
b. There is no investment limitation on U.S. Government or U.S. Agency securities, which
are direct legal obligations of the United States of America.
c. The effective duration for each fixed income portfolio will not extend more than 20%
greater than the duration of the underlying benchmark without prior written approval.
d. At least 85% of each manager’s net assets will be allocated to the following types of U.S.
dollar-denominated debt securities:
1.
2.
3.
4.
U.S. government and other public-sector entities
Asset-backed and mortgage-backed obligations of U.S. issuers
Investment-grade corporate debt of U.S. issuers
Treasury Inflation Protected Securities and Corporate Inflation Protected
Securities.
e. No more than 15% of each manager’s portfolio will be invested in a combination of non–
U.S. dollar denominated issues and high-yield bonds.
3. U.S. Equity Securities
a. The Investment Manager is able to invest in equity securities (common stocks or
convertible securities) listed on the principal U.S. exchanges, or traded on the NASDAQ
Exchange or the U.S. Over the Counter (OTC) Market.
b. Real Estate Investment Trusts (REITs) are allowable provided they are a component of
the benchmark that ASHA utilizes to evaluate that individual Investment Manager’s or
fund’s performance.
4. International Equity Securities
a. The Investment Manager is expected to invest at least 75% of their allocation into equity
securities of non–U.S. companies of countries included in the Morgan Stanley Capital
Markets Developed Market Index for Europe, Australasia and Far East (MSCI EAFE).
b. The Investment Manager may invest up to 25% of their allocation into securities
considered to be “Emerging Markets.”
c. Investment Managers may not invest in securities of countries considered “Frontier
Markets.”
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5. Real Return
a. Real Return investments are expected to utilize a combination of equity and bond
securities, foreign and domestic, including currency and commodities to collectively earn
a return 4% greater than the inflation rate (CPI) as a primary benchmark and exceed a
return of a 60% stock/40% bond portfolio as a secondary benchmark over a 3- to 5-year
market cycle.
6. Mutual Funds
a. Mutual Funds that invest in securities otherwise allowed by this statement. It will be the
responsibility of the Investment Advisor to report to the FPB on any deviations from the
policy by the Mutual Fund, and to do so in a timely manner.
7. Exchange-Traded Funds (ETF)
a. ETFs that invest in securities otherwise allowed by this statement. It will be the
responsibility of the Investment Advisor to report to the FPB on any deviations from the
policy by the ETF, and to do so in a timely manner.
8. Collective Investment Funds (CIFs)
a. CIFs that invest in securities otherwise allowed by this statement. It will be the
responsibility of the Investment Advisor to report to the FPB on any deviations from the
policy by the CIF, and to do so in a timely manner.
IX. PROHIBITED INVESTMENTS
Prohibited investments include, but are not limited to, the following (unless otherwise approved by
the FPB):
a.
b.
c.
d.
e.
f.
g.
h.
Futures Contracts*
Private Placements*
Options*
Derivative Securities*
Limited Partnerships
Direct Real Estate Investments
Venture Capital Investments
The use of leverage is not allowed
*Unless contained in a Mutual Fund, ETF, or CIF substantially investing in Allowable Investments
pursuant to this policy.
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X.
PROHIBITED TRANSACTIONS
Prohibited transactions include, but are not limited to, the following:
a. Short Selling*
b. Margin Transactions
c. No transactions in Interest-Only (IO) or Principal-Only (PO)securities, Inverse Floaters,
or any tranche that has a leveraged component embedded in the structure.
d. No transactions in commodity contracts.
e. No transactions in options, futures, derivatives, or structured notes.
f. Securities may not be loaned or used as security or collateral unless authorized in writing
by ASHA.*
g. No Purchase of Private Investment in Public Equity (PIPEs) without prior approval in
writing by ASHA.
h. All transactions that involve a broker acting as a “principal” where such broker is also the
Manager who is making the transaction, and any or all investment activities forbidden by
the Securities and Exchange Commission (SEC) or other applicable governing bodies.
*Unless contained in a Mutual Fund, ETF, or CIF substantially investing in Allowable
Investments pursuant to this policy.
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