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Huron University College Foundation

Statement of Investment Policy

This statement of Investment Policy documents the principles and policies which apply for the prudent investment and management of the assets of the Huron University College Foundation (the “Foundation”) and funds of Huron University College or others.

The Foundation appoints an Investment Committee to implement the principles and policies of the Foundation as articulated in the Huron University College Foundation Investment Committee Statement of Investment Guidelines and Practices appended hereto.

  • Investment Principals

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  • Investment Principles

    The investment assets of the Foundation and those funds invested by the College or by others from time to time will be commingled for investment purposes (the “Fund”) in order to achieve economies in management fees and commissions.

    The Fund will be managed in a prudent manner with consideration given to:

    • general economic conditions
    • the possible effect of inflation or deflation
    • the expected total return from both income and capital appreciation
    • appropriate diversification of the investments and their liquidity
    • the needs of the Foundation and College

    Specifically, the investment program will not engage in leverage practices including speculative options trading, buying on margin, short selling, and currency speculation (although investments denominated in foreign currencies are permitted) and other similar activities.

    If it is deemed appropriate, the services of external professional investment management may be engaged to provide advice and assistance for the implementation of the investment program.  In this regard, mutual funds or pooled funds might be employed in which case the investment policies of such investment vehicles must be reasonably congruent with this Statement of Investment Policy and Investment Committee Guidelines and Practices.

  • Investment Objectives

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  • The Fund’s broadly stated investment objectives are:

    (a) to ensure safety of the capital

    The Fund is to be invested in a manner that reduces the exposure to undue volatility and market risk.  Securities of recognized quality actively traded on exchanges or bond markets will be utilized.

    (b) to provide adequate income to meet cash disbursement requirements

    The income derived from the total investment return earned by the invested assets of the Fund will be based upon the concept of a total investment return reflecting both investment income received, including realized capital gains, and unrealized capital appreciation.

    (c) to maintain a balance between cash flow requirements and the need to preserve capital for future obligations

    The Fund has a long-term investment horizon and may assume the risk inherent in the use of equities in its investment portfolio in order to help offset the effect of inflation and provide for the longer term growth in the value of the portfolio.

  • Governance

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  • The management of the investment portfolio of the Foundation is to be conducted as follows.  The Foundation Board of Trustees:

    1.  Appoints the members of the Foundation Investment Committee which shall consist of:

    • At least seven appointed voting members a majority of whom are elected members of the Foundation Board of Trustees.
    • Four ex-officio members with voting privileges being the President of the Foundation, Principal, Chair of the College Executive Board and the Chair of the College Executive Board's Finance Committee
    • Ex-officio members without voting privileges are the Executive Director and the Treasurer of the Foundation, and Past President of the Foundation
    • Members will be appointed for a term of one (1) year which may be renewed
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    2. Approves the Investment Guidelines and Practices and any changes thereto as recommended by the Investment Committee

     

    3. Receives at least semi-annual reports from the Investment Committee and may request assessment and evaluations of alternative investment policies and strategies

     

    4. Is the body ultimately responsible for the prudent management of the investment portfolio with particular reference to the requirements of the Trustee Act (Ontario) and amendments thereto.

     

  • Conflict of Interest

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  • Any member of the Foundation’s Board of Trustees, or any agent or advisor, having a material pecuniary interest, direct or indirect, in any matter relating to the investment of the Fund shall declare such interest and refrain from participating in any discussion or vote pertaining thereto.  It is recognized that agents or advisors may benefit from recommendations which they make in the normal course of business in the event the recommendations are adopted.

    Each external investment manager is required to comply with the Code of Ethics and Standards of Professional Conduct adopted by the Association for Investment Management and Research.  All investments selected by the external investment manager will be in accordance with Standards of the Institute of Chartered Financial Analysts with particular reference to the Standard that requires the investment manager, when taking investment action on behalf of a client, to consider the appropriateness of such action for the portfolio being managed.

The Foundation or its Investment Committee will liaise with the College Executive Board through the Chair of the College Executive Board's Finance and Audit Committee.

Adopted April 2003
Revised December 3, 2010

Statement of Investment Guidelines and Practices

The Huron University College Foundation Investment Committee is governed by the Foundation's Statement of Investment Policy and is responsible to the Foundation Board of Trustees.

  • Investment Committee Mandate

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  • Investment Committee Mandate

    1. May obtain external professional advice and knowledge to assist with the prudent management of the investment portfolio in accordance with the approved policies and guidelines
    2. Reviews, as necessary, the Statement of Investment Guidelines and Practices and recommends amendments thereto for the approval of the Foundation Board of Trustees
    3. Reviews the asset allocation on an annual basis during the first meeting of the calendar year to ensure the asset mix supports the Foundation’s Investment Principles and Objectives
    4. Directs the investment of the portfolio according to the approved asset mix policy in those markets considered to be most appropriate
    5. Re-balances the portfolio by transferring funds amongst investment managers and asset classes as appropriate
    6. Makes decisions concerning the engagement and termination of external investment managers, advisors, and custodians. A formal review of the investment manager’s performance against benchmarks and peer performance measures will occur no less frequently than every five years.  The review will be discussed at the first meeting of the appropriate calendar year or earlier as deemed necessary, and the review may or may not result in a manager search.
    7. Within the approved Statement of Investment Guidelines and Practices, approves mandates and objectives given to external investment managers and establishes criteria for manager review
    8. Meets quarterly to monitor investment performance, review investment transactions and to ensure compliance with approved policies and mandates
    9. Reports to the Foundation Board of Trustees semi-annually or as required
  • Asset Policy Mix

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  • The asset mix is intended to provide, over the long term, a balance between investment returns and an acceptable level of risk.  As a general long term approach for a balanced fund, a reasonable balance between equities and fixed income securities will be chosen as appropriate.  Within these two broad categories, several investment components in the portfolio are permissible.

    The approved long-term asset mix policy, termed the benchmark portfolio, is as follows:

    Cash 0%
    Bonds:
    Canadian 40%
    Non-Canadian 0%
    Total Bonds
    40%
    Equities:
    Canadian 30%
    Foreign 30%
    Total Equities: 60%
  • Investment Portfolio Implementation

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  • The implementation of the investment portfolio will be governed by the following asset mix range limits:

    Asset Class
    Minimum Maximum
    Cash & Equivalents
    0% 10%
    Fixed Income:


    Canadian 35% 45%
    International Global and/or High Yield
    0% 10%
    Total Fixed Income
    35% 55%
    Equities:

    Canadian 25% 35%
    Foreign 25% 35%
    Total Equity
    50% 70%

    As per the minutes of the Investment Committee meeting of December 3, 2010, implementation of the above asset mix (#2 and #3) will be considered in conjunction with the 2011 manager review.

  • Assessment of Investment Return & Performance

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  • Investment returns will be reviewed quarterly by the Investment Committee and will be measured against the following criteria:

    (a) the total return of the benchmark portfolio
    (b) cash
    Canada 91-day Treasury Bills
    Canadian Bonds
    DEX Universe
    Canadian Equities
    S&P/TSX Composite Index
    Foreign Equities
    MSCI World Index

  • Performance Objectives

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  • Performance objectives of the Fund are:

    (a)  to outperform the benchmark asset mix policy return by 1% over moving four-year periods

    (b) to be at or above the median fund returns for each asset category as measured by a recognized investment universe service over moving four-year periods

    (c) to achieve a return over moving four-year periods of 5% in excess of the Consumer Price Index

  • Investment Quality Constraints

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  • (a) Money market securities:

    The short-term component of the portfolio may be invested in securities maturing within 1 year.  All such investments must be rated R1 or equivalent.

    (b) Fixed income securities:

    • At least 50% of the fixed income security component of the portfolio to be invested in federal and provincial government and government guaranteed bonds.  The credit rating usually will be at least single A; however, up to 15% of the fixed income portfolio may be invested in bonds carrying a BBB rating MSCI World ex-Canada.
    • Corporate bonds usually will have a minimum A rating; and may include high yield bonds (BB or lower) which are not investment grade (BBB or higher). Any single corporate name must not represent more than 5% of the bond portfolio at market value. 
    • Debt ratings will be fr om a recognized credit agency.
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        (c) Equities:

         

        • No equity investment shall represent more than 10% of the equity portfolio at market value.
        • In the Canadian equity portfolio, total investments in any sub-index or sector of the T.S.E. will not exceed the S&P/TSX Index weight plus 8 percentage points.
        • A maximum of 15% of the market value of the equity portfolio may be invested in small-cap companies with a market capitalization of $750-million or less.
        • A minimum of 20 stocks shall be held in the Canadian equity portfolio and a majority of the 10 industry sectors contained in the S&P/TSX will be represented in the portfolio.
  • Quorum

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  • A quorum for the conduct of the business of the Investment Committee shall consist of 50 per cent of voting members either present in person or by teleconference.

  • Voting Rights

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  • The investment manager may exercise the voting rights of any investment held by the Fund.  It is recognized that the professional knowledge of the investment manager will enable the manager to vote affirmatively on any proposals that will accrue and enhance the investment value of the relevant security.  Similarly, it is expected that the investment manager will vote against any proposals that will unduly increase the risk level or reduce the investment value of the relevant security to the detriment of the invested funds.  In any situation wh ere a proposal is placed before shareholders for a vote and the investment manager is unsure of the appropriate vote to cast, the matter will be referred to the Foundation Investment Committee.

    All proxies exercised by the portfolio manager for investments held in the Fund will be reported quarterly to the Investment Committee for review.

  • Conflict of Interest

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  • Any member of the Foundation’s Investment Committee or any agent or advisor, having a material pecuniary interest, direct or indirect, in any matter relating to the investment of the Fund shall declare such interest and refrain from participating in any discussion or vote pertaining thereto.  It is recognized that agents or advisors may benefit from recommendations which they make in the normal course of business in the event the recommendations are adopted.

    Each external investment manager is required to comply with the Code of Ethics and Standards of Professional Conduct adopted by the Association for Investment Management and Research.  All investments selected by the external investment manager will be in accordance with Standards of the Institute of Chartered Financial Analysts with particular reference to the Standard that requires the investment manager, when taking investment action on behalf of a client, to consider the appropriateness of such action for the portfolio being managed.

  • Purchase & Redemption of Units from the Investment Manager

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  • (a) Timing of investments:

    Purchase of units will be made in January each year and then prior to the end of each quarter (March, June, September, December). In the intervening periods, any single donation over $50,000 will trigger a purchase of units earlier in the quarter.

    (b)  Type of investments:

    When funds are invested, the investment manager makes purchases to maintain the asset mix consistent with the Foundation’s investment policy.

    (c) Timing of redemptions:

    Redemptions are made twice annually, May 1 and November 1, to provide the annual approved payout to the College.

    (d) Type of units redeemed:

    Redemptions will be made by the investment manager consistent with the approved asset mix.

Adopted April 2003

Revised April 26, 2011