GUAM PRESERVATION TRUST INVESTMENT POLICY
The intention of the investment policy statement is to provide guidance for the management of the portfolio assets allowing for changing economic, business and investment market conditions.
Designated assets of the Guam Preservation Trust shall be treated as available for long-term investment. Income from these assets accumulates tax-free and will be invested in a manner that would achieve the greatest risk-adjusted total return within the investment guidelines using the acceptable investments outlined below.
INVESTMENT GUIDELINES AND ASSET ALLOCATION
The portfolio will be invested using all major asset classes with the goal of minimizing
risk (as measured by standard deviation) and maximizing potential return within the
Fixed Income (Bonds)
Small, Mid, and Large Cap Domestic Equities*
Small, Mid, and Large Cap International Equities*
Asset Allocation: **
|Cash Equivalents Target||80%***||55-65%|
*Domestic Equities should utilize both growth and value styles of investing.
**-Re-balancing will be done on a semi-annual basis or more frequently if deemed necessary.
***Policy change March 14, 2012 Board Resolution
Acceptable investments will typically fall into one or more of three general categories:
- Money Market/Cash Equivalent Funds
- Equity Investments (Stocks)
Limits on percent holdings for individual issues, sectors, or mutual funds include:
- Total issues of equity of any one corporation, open-end investment company, or mutual fund may not exceed 15% of the market value of the entire portfolio at the time of purchase.
- Fixed income securities of any one issuer, open-end investment company, or Bond mutual fund may not exceed 15% of the market value of the entire portfolio at the time of purchase.
CRITERIA FOR SELECTING INVESTMENT MANAGERS AND MUTUAL FUNDS
The following criteria will be evaluated when selecting investment managers and mutual funds:
Mutual fund objective or style —
- Style discipline – current and historical
- Average market capitalization of stocks held
- Total fund assets
- Concentration of holdings
- Current and historical cash levels
- Sector weightings
- Regional weightings
- Turnover ratio
- Utilization of hedging strategies
- Volatility or risk
Mutual fund performance
- Performance vs appropriate benchmarks
- Performance versus funds utilizing the same style discipline or market capitalization
- Performance during various market cycles
- Expense ratio of fund
- Only no-load funds are utilized
- Use and percentage 12B-1 fees
- Manager tenure and relevant experience
- Manager style discipline
- Length of time fund manager has been in the investment management business
- Total assets managed by fund manager
- Operational issues related to purchase or redemption restrictions, telephone transaction capabilities, and wire transfer capabilities
GUIDELINES AND PROCEDURES FOR MONITORING FUNDS
The investment advisor is responsible for reviewing the investments, their performance, and their managers on a quarterly basis. The review will be performed by applying the above criteria keeping within the allowable investments outlined by this investment policy statement. Performance will be measured by using the comparable benchmark listed in this investment policy statement.
PROCEDURES FOR FUNDS AND/OR MANAGERS WHO FAIL TO MEET CRITERIA
If a fund or investment manager is not meeting the criteria contained within this investment policy statement the following actions will be taken.
The investment advisor will notify GPT Chief Program OfficerJ Board Treasurer, and Board Chairman by phone or email, and Jetter to discuss the concerns and make recommendations to improve asset allocation. The GPT Chief Program Officer Board Treasurer or the Board Chairman will contact the Finance Committee to discuss the
situation and decide whether to meet interim (special meeting) or in tandem with Board meetings (regular meetings). The Finance Committee will review the situation and make a recommendation. If the situation is urgent, the Finance Committee will direct the investment advisor to reallocate the mutual fund(s). Otherwise, the decision will be approved at the next regular Board meeting.
The Guam Preservation Trust prohibits investing or holding any portfolio assets in the following types of investments:
- Investments considered to be derivatives or contain derivatives in their portfolio
- Letter stocks
- Private placements
- Futures or managed future funds
- Margin transactions
- High risk bonds, including junk bonds
- Life Insurance contracts
- Tangible assets such as gold and silver
BENCHMARKS USED TO REVIEW INVESTMENT PERFORMANCE
Performance review of the investment will be assisted with printed reports that provide benchmarks of comparable character with each class in the portfolio assets. The Board recognizes the allocations of the investment may change over time. The benchmarks, therefore, will change to monitor the performance of the particular class of assets.
The following benchmarks will be used for performance measurement in each of the above listed investment categories.
|Cash Equivalents, Short Term Bonds/Funds
Intermediate Term Bonds/Funds
Domestic Mid to Large Cap Value
Domestic Small Cap Value
Domestic Large Cap Growth
Domestic Mid Cap Growth
Domestic Small Cap Growth
International Large Cap Value/Growth
International Small Cap Value/Growth
|U.S. 3 Month T-Bill
Lehman Intermediate Gvmt
Russell 1000 Value
Russell 2000 Value
Russell 1000 Growth
S&P Midcap 400
S&P Smallcap 600
Russell 2000 Growth
MSCI All World Free (ex US)
Lipper lnt’l Small Cap lndx
PARTICIPANT EDUCATION AND INVESTMENT UPDATES
The Financial Advisor will take an educational approach to keeping the Guam Preservation Trust staff and Board informed concerning its investment. The Financial Advisor will provide industry newsletters and inform the Board and staff on pertinent seminars, whenever available.
At the semi-annual meetings with the Finance Committee or Board, the financial advisor will provide information and education on:
- Prudent investing
- Investment strategy for a non-profit
- lndustry segments where GPT is currently invested
- Measures of investment performance
REVIEW OF INVESTMENT POLICY AND PERFORMANCE
The expectations regarding statement frequency, activity reporting, and update meetings are as follows:
- Monthly printed performance statement of assets with appropriate benchmarks to designated Finance Committee members. The printed reports will be clearly presented and easily understood.
- Quarterly printed performance statement of assets with appropriate benchmarks to
the Board. The printed reports will be clearly presented and easily understood.
- Semi-annual updates at meetings of the Finance Committee or Board to review:
- Investment policy guidelines
- Investment performance vs. appropriate benchmarks
- Evaluation of plan expenses
- Current market and economic conditions
- Anticipated changes in the portfolio
- Anticipated changes in GPT needs from the portfolio
- Any other financial issues
OUTLINE OF ROLES AND RESPONSIBILITIES
Roles and responsibilities of the following people and/or committees are:
- GPT Chief Program Officer
- Maintain file of reports and important communication from the Financial
- Communicate with the Financial Advisor;
- Review monthly performance reports from the Financial Advisor;
- Review and discuss performance reports and significant communications from
the Financial Advisor at Finance Committee meetings.
- Provide written reports at regular Board meetings.
- Maintain file of reports and important communication from the Financial
- Review monthly performance reports and significant communications from the Financial Advisor;
- Review, facilitate, and discuss performance reports and significant communications from the Financial Advisor at Finance Committee meetings.
- Facilitate recommendations from the Finance Committee at regular Board meetings.
- Financial/Investment Advisor
- Invest designated assets in accordance with this investment policy statement;
- Provide regular performance reports and significant communications to identified GPT staff and Board;
- Make recommendations for investment strategy to the Finance Committee; and
- Meet with the Finance Committee and Board semi-annually to review investment performance, policy, and strategy.
- Finance Committee
- Review quarterly performance reports and significant communications from Financial/Investment Advisor;
- Critically assess and discuss performance reports and significant communications from the Financial/Investment Advisor at Finance Committee meetings; and
- Make recommendations at regular Board meetings
- Board of Directors
- Review performance reports and significant communications from the Financial/Investment Advisor; and
- Review and decide on recommendations from the Finance Committee
RECORD RETENTION POLICIES
Copies printed reports and important communication are kept by GPT staff in the GPT office at Historic Lujan House 157 Padre Palomo Street, Hagatiia, Guam. As a public entity, anyone has access to these files. Notification to review these files must be received 3 weeks before desired review.