GP30 - Investment Limitations Policy
|Policy Number:||GP 30||Effective Date:||April 1, 2021|
|Last Review Date:||March 2021||Next Review Date:||March 2022|
|Review Frequency:||Annually||Related Supporting Documents: |
The College is governed by Council which delegates the oversight of the College’s investment performance to the Finance and Audit Committee (“Committee”). The Committee through established investment parameters holds the CEO and Registrar, and the College’s management accountable to achieve the key investment objectives of:
- Preserving capital amounts
- Avoiding undue risk of loss
- Obtaining a reasonable rate of return
- Providing growth and income that aligns with College obligations
The Committee provides oversight through the following established Investment Limitations:
- Management will ensure that an investment strategy is established that achieves Council’s investment objectives, cashflow needs, and risk tolerances.
- Management will ensure that the strategy is reviewed and/or revised at least on an annual basis.
- All funds available for investment will be invested in an appropriate mix of short-term and long-term investments as agreed to by the Committee.
- Investment advisory is established through the Committee to oversee the investment parameters and management of the investments.
- Management will retain the service(s) of an external professional investment manager(s) to select and direct the investment of the fund(s) in accordance with the objectives established in this policy, and in line with the following guidelines:
- The investment object is to ensure all funds are prudently invested in accordance with this policy and that investments are selected to match the anticipated cashflow requirements, risk tolerance and investment objectives of the College.
- This objective necessitates incurring generally accepted investment risks through ownership of financial securities to preserve capital amounts, obtain a reasonable rate of return, and provide growth and income that align with College needs and obligations.
- All short-term funds are maintained in a bank, treasury branch, credit union, loan corporation or trust corporation. To facilitate the college’s cash requirements, interest-bearing cash or liquid, high-quality cash equivalents will be maintained at greater than 40% of the College’s expenditure budget.
- The primary investment objective for long-term funds is the preservation of capital in real dollar (inflation adjusted) terms in perpetuity.
- The secondary investment objective for long-term funds is to achieve modest growth in real dollar terms over time.
- Long-term investments based on the above primary and secondary objectives require a low-risk, conservative investment strategy which emphasizes fund preservation with a modest growth component.
- Long-term investment portfolio target allocation mix is:
- 65% Fixed Income, 35% Equity
- Ranges around each target allocation permit:
- 50% to 80% allocation for Fixed Income, and
- 20% to 40% allocation for Equity
- Ranges around each target allocated for fixed income and equity enable cash balances from matured fixed income funds or sold equity funds to be held until appropriate timing to purchase new funds (i.e. to remain compliant with policy until future purchases).
- For compliance purposes, when the asset allocation of long-term investments reaches or exceeds the top of range for greater than 90 days, management shall engage in discussion with the Committee regarding (1) the appropriateness of the target range given the context of the financial environment, and (2) a plan forward.
- Benchmarks will be determined and used as a comparison for performance reviews.
- No acquisition of land as an investment without prior approval of Council.
- There shall be no investment where the liability is beyond the amount invested.
Investment Policy Compliance Reporting
The Committee provides oversight of Investment Policy Compliance through confirmation provided by investment manager(s) on annual basis regarding their compliance with the investment objectives and limitations.