Investment Policy Statement for Southern Arkansas University Foundation
This Investment Policy Statement was adopted by the Board of the Southern Arkansas University Foundation (SAUF) to direct the prudent investment of all funds under its jurisdiction.
All funds of SAUF shall be overseen by the Board of Governors (BOG). At the discretion of the Board, an Investment Committee shall advise and monitor the investment process. The BOG has the option to select external professionals to manage the funds. The external managers shall report directly to the BOG and adhere to the guidelines established by the BOG.
The primary objective is to seek maximum long term returns consistent with prudent levels of risk. The SAUF funds have an indefinite time horizon that runs concurrently with the existence of the University in perpetuity. In seeking this return, the BOG shall exercise prudence in accordance with the Uniform Prudent Management of Institutional Funds Act (UPMIFA) and any subsequent addendums.
The investments shall be diversified into the following categories:
a. Domestic equity
b. International equity
c. Fixed income
e. Alternative investments
Domestic equities shall be companies that are listed on the New York Stock Exchange (NYSE) or the NASDAQ exchange. Equity holdings in any one company shall not exceed 5 per cent of the market value of SAUF funds. Not more than 25% of the market value of the portfolio shall be invested in any one economic sector. Domestic equities may include large capitalization, mid capitalization, and small capitalization whose mix shall be determined by the fund manager according to current market conditions. The total of all capitalizations of equities shall not exceed 80% of the entire market value of the SAUF funds.
International equities shall include non-U.S. companies listed on the NYSE or the NASDAQ. In addition, international equity investments may include properly registered mutual funds and exchange traded funds (ETFs) that hold international equities. The total value of all international equities shall not exceed 40% of the entire equities market value of the SAUF funds.
Fixed Income shall be composed of debt issued by the U.S. Government and its Agencies, corporations, and municipalities. The ratings of the fixed income securities shall not be below investment grade as recognized by the accepted credit agencies. In the event a fixed income security is downgraded below investment grade by more than one agency, it shall be removed from the portfolio. The total value of all fixed income shall not exceed 50% of the entire market value of the SAUF funds.
Cash shall be held in a money market instrument. While it is not an investment class, the cash component will be used to collect dividends, interest, proceeds from sales, and for dispersements to the University. Over the short term, holding cash during market turbulence may be considered prudent. Unless the cash is earning significantly above market and/or the inflation rate, the target is not more than 10% of the total market value of the SAUF funds.
Alternative investments involve investing in non-traditional asset classes that may include real estate, timber, private equity, and commodities. Any investment in this category shall first be approved by the BOG. The total value of the alternative investment class shall not exceed 15% of the total market value of the SAUF funds.
Any investment class that wishes to exceed the maximum target per cent must first receive an exception vote from the BOG.
IV. Quantitative Performance guidelines
The investments shall be measured against the following benchmarks:
Large Cap Equity Russell 1000 IWB
Mid Cap Equity Russell Midcap IWR
Small Cap Equity Russell 2000 IWM
Total Market ishare U.S.Index IYY
Fixed Income Barclay’s Aggegate bond AGG
International Equity MSCI EAFE EFA
Alternative as appropriate
Cash Money market universe
Investment performance reviews shall be conducted at least quarterly by the BOG and/or the designated committee. These reviews will allow the BOG to analyze the adherence to stated guidelines, review performance, address any concerns, express any future needs or changes required going forward. The BOG and/or the designated committee shall review all the investments of SAUF to ensure compliance with stated objectives.
VI. Investment managers
The investment managers shall be selected by the BOG and reviewed annually. The investment managers shall be paid a reasonable fee agreed upon by both parties. The BOG may change investment managers by a majority vote.
VII. Investment Policy Review
The Investment Policy Statement shall be reviewed periodically for modification in order to conform to changes in objectives, guidelines, or other criteria deemed necessary by the BOG.
Approved by the SAU Foundation Board of Governors on April 21, 2017.