Investment Policy Statement

  1. Introduction

 

The La Salle University Investment Club is nonprofit fund that was created to enhanced and educate students about the investment world. The purpose of this Investment Policy statement is to establish guidelines for the Fund’s investment portfolio. The IPS also incorporates accountability standards that will be used for monitoring the progress of the portfolio’s investment program.

 

  1. Role of the Investment Committee

 

The investment Committee is acting in a fiduciary capacity with regards to the Portfolio, it is accountable to the Club advisor and Finance department for overseeing the investment of all assets owned by, or held in trust for, the portfolio.

  1. The Investment Policy statement sets forth the investment Objectives, distribution policies, and investment guidelines that govern the activities of the Club for portfolio assets.
  2. The investment Policies for the Club have been formulated consistent with the institution’s financial needs and in consideration of the institution’s tolerance for assuming investment and financial risk, as reflected in the majority opinion of the Club.
  3. Policies contained in this statement are intended to provide guidelines for ensuring that the Portfolio’s investments are managed consistent with the short-term and long-term financial goals of the Club. However, they are intended to provide for sufficient investment flexibility in the face of changes in capital market conditions and in the financial circumstances of the club.
  4. The Club will review this Investment Policy statement at least once a year or as many times as needed. Changes can be made only by affirmation of a majority of the club and with the approval of the advisor.

 

  • Investment Objective and Spending Policy

 

  1. The fund is to be invested with the objective of preserving the long-term, real purchasing power of assets while providing a relatively predictable and growing stream of annual distributions.
  2. For the purpose of making distributions, the club shall make use of a total-return based spending policy, meaning that it will fund distributions from net investment income, net realized capital gains, and proceeds from the sale of investments.
  3. The distributions of club assets will be permitted to the extent that such distributions do not exceed a level that would erode the Club’s real assets over time. The club will seek to reduce the variability of annual club distributions by factoring past spending and Portfolio asset values into its current spending decisions.
  4. Periodic cash flow, either into or out of the portfolio, will be used to better align the investment portfolio to the target asset allocation outlined in the asset allocation policy.

 

  1. Asset Allocation Policy

 

  1. Fund assets will be managed as a balanced portfolio composed of two major components: an equity portion and a fixed income portion. The expected role of the club equity investments will be to maximize the long-term real growth of the portfolio assets. The role of the fixed income investments will be to generate current income, provide more stable periodic returns and provide some protection against a prolonged decline in the market value of Portfolio equity investments.
  2. Cash investments will only be considered as temporary Portfolio holdings, and will be used for Club liquidity needs, or transferred into either the equity or fixed income asset classes if needed.
  3. Below represents the long-term strategic asset allocation guidelines, determined by the club to be most appropriate, given the club’s long-term and short-term objectives. Portfolio assets will be allocated across the broad asset and subasset classes in accordance with the following:

 

Asset Class                  Subasset Class             Target Allocation

 

Equity                                                                         85%

U.S.                                         75%

Non-U.S.                                 10%

 

Fixed Income                                                              10%

Investment Grade                   7%

Below-Investment Grade       3%

 

Cash                                                                            5%                  

 

  1. Diversification Policy: It is imperative that the club diversifies across and within asset classes. This allows the Portfolio to avoid undue risk of large losses over long time periods. In order to protect the portfolio against unfavorable outcomes within an asset class due to the assumption of large risks, the club will take reasonable precautions to avoid excessive investment concentrations.
  • No single investment security shall represent more than 5% of the total Portfolio’s assets.
  • No single investment pool or investment company (mutual fund) shall represent more than 20% of the total Portfolio’s assets.
  1. Managing Portfolio Investments and Performance

 

The Club will manage and monitor the Portfolio’s investment performance against the portfolio’s stated investment objectives. At a frequency to be determined by the club, it will formally assess the Portfolio and the performance of its underlying investments as follows:

  1. The Portfolio’s absolute long-term real return objective.
  2. We want to be actively managed (at least one trade per week)
  3. A composite benchmark consisting of the following unmanaged market indexes weighted according to the expected target asset allocations stipulated by the Portfolio’s investment guidelines.
  • S. Equity: Wilshire 5000 Total Market Index
  • Non-US Equity: MSCI EAFE + EM Index
  • Investment Grade Fixed Income: Barclays Capital US Aggregate Bond Index
  • Non-Investment Grade Fixed Income: Barclays Us Capital US Corporate High Yield Bond Index
  • Cash: Citigroup 3-Month T-Bill Index
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