Foundation Investment Policy
The purpose of this statement is to establish a clear understanding between Atlantic Cape Community College Foundation (Foundation) and its Investment Manager(s) (“The Manager”) of the investment policies and objectives of the Investment Funds (“The Funds”). This statement will outline an overall philosophy that is specific enough for The Manager to know what is expected, but sufficiently flexible to allow for changing economic conditions and securities markets. The policy will guide The Manager toward long-term rate of return objectives, which will serve as standards for evaluating investment performance. The policy will also establish the investment restrictions to be placed upon The Manager and will outline procedures for policy and performance review.
Investments will be made in the sole interest and for the exclusive purpose of providing returns for The Funds. The assets must be invested with the care, skill and diligence that a prudent person acting in this capacity would undertake. All investments will be made in compliance with legal guidelines and statutes.
The Manager’s primary responsibilities are:
- To implement these policies so as to achieve the objectives of The Funds.
- To notify the Foundation Board of Trustees, through the Treasurer, of any circumstances where The Manager believes the policy needs to be modified to achieve the stated objectives.
- To pursue long-term goals to maximize the returns without exposure to undue risk, as defined herein.
- To preserve capital of the assets and the consistency of the portfolio returns in a way that can be defined as “moderately conservative growth and income.”
The Foundation expects the asset allocation policies to reflect and be consistent with the investment objectives and risk tolerances expressed in this statement. In summary, the allocations should provide the highest probability of meeting or exceeding the return objectives at the lowest possible risk. The standard of a three-year moving time period will be used to evaluate whether the allocation achieves stated goals.
|Asset Class||Min Percent||Max Percent||Representative Index|
|Equities||45%||70%||S&P 500, Russell Mid-Cap, Russell 2000, MSCI EAFE|
|Fixed Income||30%||55%||Barclays Capital US Aggregate
|Cash & Cash Equiv.||4%||10%||n/a|
A primary objective of the Equity portion of the portfolio is to achieve a net annual return that equals or exceeds the CPI plus 6-7% over rolling 3 and 5-year periods. A secondary objective of the Equity portion is to outperform (net of fees) the S&P 500.
The Foundation expects the Manager to maintain the equity portfolio at a risk level roughly equivalent to that of the representative equity index, with the objective of exceeding its results over a moving three year period. Equity holdings may be selected from the New York, American and Regional Stock Exchanges, or the NASDAQ markets.
Equity holdings must represent companies meeting a minimum capitalization requirement of $100 million with high market liquidity. Investment in any one stock should not exceed 3% (as per cost basis of the individual stock) of the total portfolio balance invested in equities. Any securities of foreign companies traded on foreign stock exchanges, derivative financial instruments, hedge funds, private placements, letter stock, and uncovered options against common stock are generally unacceptable investments and may only be considered with Foundation Board of Trustees explicit and written consent. It is expected that no assets will be invested in securities whose issuers have filed a petition for bankruptcy.
The investment objectives of fixed income instruments are to provide a hedge against deflation, to provide a consistent rate of current income and to provide diversification of Fund assets. Returns are expected to exceed change to CPI by at least 2% annually over rolling 3 and 5 year periods.
Managers may select from appropriately liquid corporate debt securities, obligations of the US Government and its agencies, and securities convertible to equities. These investments are subject to the following limitations:
- Investments in securities of a single issuer (with the exception of the US Government and its agencies) must not exceed 5% (computed on the cost basis of the individual security) of the market value of the fixed income portfolio without explicit and written permission of the Foundation Board of Trustees.
- Only corporate debt issues that meet or exceed a credit rating of the BBB from Standard and Poor’s and/or a BAA rating from Moody’s may be purchased.
- It is expected that the Bond portfolio will be well diversified as to maturities, but not to exceed 30 years.
- In the event of a downgrade of below investment grade of any bonds, notice must be given to the Foundation Treasurer within five (5) working days. The
Treasurer working with the Foundation Finance Committee shall make a determination as to the disposition of the security.
Cash and Cash Equivalents:
The Manager may invest in commercial paper, repurchase agreements, Treasury Bills, certificates of deposit, and money market funds to provide income, liquidity for expense payments, and preservation of the principal value of the account. All such assets must represent maturities of one year or less at time of purchase. Commercial paper assets must be rated A-1 or P-1 by Standard & Poor’s and Moody’s respectively. The Manager may not purchase short-term financial instruments considered to contain speculative characteristics (uncertainly of principal and/or interest).
The Manager is expected to be fully invested within each sector throughout the market cycle. Cash equivalents should be held only in anticipation of specific investment opportunities or for disbursement needs, rather than for market-timing considerations. If the Manager believes that anticipated market conditions justify a defensive cash equivalent position, the Foundation should be so advised, and The Manager may take action only with explicit consent.
The Manager may not purchase assets other than those mentioned above without the written consent of the Foundation Board of Trustees.
The purpose of an investment spend policy is to provide a general guideline to accomplish two goals:
- Preserve the purchasing power of an endowed corpus, and
- Ensure that a majority sum of net interest is distributed as per donor or board direction.
Unless otherwise directed by the donor at the time of the donation, and agreed to by the
Atlantic Cape Community College Foundation (the “Foundation”), the Foundation shall distribute 80% of an annual audited net interest (interest earned minus fees paid) from endowed funds as per donor designation or Foundation Board direction. The remainder, 20%, shall be reinvested to preserve the purchasing power of the corpus over time.