The investment objective of the Foundation is to generate a reasonable investment return consistent with the Foundation’s needs; with due regard, however, to the safety of principal but also to the desirability of some long-term appreciation of principal. In doing so, the Foundation recognizes the needs to: (1) produce income; (2) protect principal: (3) provide moderate growth of capital; and (4) provide a mechanism to keep the Foundation’s funds fully invested, in conformity with Foundry Educational Foundation Canada (FEF) Bylaws and with reasonable prudence by registered qualified independent investment managers who are registered with the Investment Industry Regulatory Organization of Canada (IROC) and assume fiduciary responsibility for all assets under management.
STATEMENT OF PORTFOLIO OBJECTIVES:
Income Levels: Generally, the highest return on investment results from higher-risk, longer-term securities. In light of this, it is not always prudent to judge a portfolio solely by its income yield. Yield objectives ( i.e. income levels ) should be determined periodically in conjunction with current interest rates, liquidity needs, and asset/liability matches. (Investment performance is to be evaluated net of investment management fees.)
Liquidity Requirements: Realizing the Foundation incurs periodic operating expenditures some funds need to be readily available to meet those needs. It is an objective of the Foundation to maintain sufficient funds in liquid assets and accounts ( i.e. checking-type account ), preferably an account that is interest bearing.
Risk Constraints: The Foundation is given the responsibilities for the prudent investing of the funds of the Foundation. Realizing this, the Foundation will not invest the funds entrusted to them in a speculative manner and investments should have diversification by type and maturity.
Investment Policy: The Foundation, through the Investment Committee and Executive Committee, shall be responsible for providing oversight and direction to the financial affairs of the Foundation. This will include, but not be limited to, the following:
- Establishment of an investment strategy consistent with the objectives stated in this Policy
- Supervision for investments of the Endowment Fund
- Selection of investment managers, consultants, and custodians
- Review performance of the selected investment advisor(s)
- Ensure that the Foundation and its Board of Directors are meeting fiduciary responsibilities and minimizing potential liability issues which could arise against the Foundation or individual Board members
- Appropriate Types of Investments. The following guidelines will apply in making investments for the Foundation.
- Investments may be in securities (i.e. bonds and stocks) of the Canadian and U.S. Governments and or of corporations in Canada and the United States.
- Investments may be in Mutual Funds and/or Exchange Traded Funds (ETFs)
- Investments may be in savings deposits and money market instruments
- All investments must be payable in Canadian and/or U.S. dollars
- All securities must be highly liquid
- Individual fixed income securities should be rated BBB or better by rating services
- Up to 15% of the portfolio may be invested in fixed income securities rated below BBB if done within a diversified investment fund and/or ETF
- The following securities or transactions are PROHIBITED: short sales, margin purchase, limited partnerships, purchases for the purpose of exercising control of management, stock loans, common stock of foreign companies not listed on one of the major security exchanges
- Asset Allocation Targets (based on a 2% over inflation long-term return target)
- The asset allocation policy is to provide the framework under which the portfolio will be invested.
- The following ranges will apply to all investments held by the Foundation:
|Investment Class||Target||Permitted Range
|Total Equities||35%||0 – 55%
|Large Cap CDN Equity||20%||15 – 25%
|Small/Mid Cap||5%||0 – 15%
|U.S. / International||10%||0 – 20%
|Total Fixed Income||65%||50 – 75%
|Investment Grade||55%||45 – 65%
|High Yield||5%||0 – 15%
|International/Global||5%||0 – 10%
|Alternatives (Real Estate, Gold)||0%||0 – 10%
- Performance and Reporting Mechanisms
- On an annual basis, the Investment Manager will supply the Foundation with a detailed report including: (1) a portfolio review, including asset allocation and individual securities; (2) a narrative detailing the strategies utilized in the past year as well as anticipated strategies to be followed in the ensuring year; (3) a summary of performance versus the stated blended benchmark
- On a no less than annual basis, the Foundation will meet the Investment Manager to discuss the portfolio and performance
- Monthly, the Foundation Executive Director and the Treasurer shall receive a statement of transactions, income activity, and investments for financial reporting purposes to insure all investment activity is accounted for properly and timely
- The portfolio benchmark will be: 5% CDN T-Bill index, 65% CDN DEX Bond Universe Index, 20% TSX Composite Index, 10% MSCI World index
- Selection of an Investment Manager. It is the responsibility of Foundation to determine the most financially prudent avenues for managing the investment activities of the Foundations funds. In that regard, the Foundation may decide to obtain an Investment Manager to perform the investment activities of the funds. The Investment Manager shall receive the Investment Policy of the Committee and abide by it in his fiduciary duties. An Investment Manager shall be placed on or removed from the approved list upon recommendation of the Foundation. In selecting an Investment Manager, the following shall be taken into account:
- the financial condition of the firm
- the skill and accessibility of its agents
- the firm’s access to markets
- the track record of the firm with respect to performance
- back office support and accuracy of transactions
- ability of the firm to assist in investment planning
- Annual Policy Review. On an annual basis, or at any time deemed necessary, this policy shall be reviewed to determine whether any modifications should be made. Any modifications of this policy shall be approved by the full Board of Directors of the Foundation.