Policy Document No. P1

Policy Statement: General funds investment

Key Words

• Investment Policy
• Treasury Funds
• Investment Funds

1. Intent

The University pursues a policy of maximising the investment return on cash balances, reserves and restricted funds, in an economic and efficient manner, subject to an overriding commitment to financial prudence in managing investment funds, and in accordance with approved investment criteria.

2. Scope

This policy applies to Council, the Finance Committee, Investment Managers appointed to manage funds on behalf of the University, Investment Consultants appointed to provide expert and independent advice in regard to investment strategy and management, and the Executive Director, Finance & Administration.

3. Objectives

The objectives of this policy are to:

• detail the authority delegated by Council; and
• provide guidelines for the composition of general funds investments.

4. Definitions and Acronyms

5. Policy Owner

As Council approves the policy on the recommendation of the Finance Committee, it is the policy owner.

6. Policy Provisions

6.1 Authority Delegated by Council

Council delegates authority as follows:

• Finance Committee is authorised to appoint one or more Investment Managers to manage funds on behalf of the University, and an investment consultant to provide expert and independent advice in regard to investment strategy and management;
• Investment Managers are authorised to invest in securities as defined in this policy subject to:
  • the conditions of the agreement signed between the University and the Investment Manager;
  • the specific directions by the Executive Director Finance & Administration concerning University liquidity requirements; and
  • monthly review of performance by the Finance Committee
• The Finance Committee will determine the level of assets to be held from time to time, on the advice of the Investment Consultant and advise Council with respect to investment management issues;
• The Executive Director Finance & Administration is authorised to re-invest surplus funds, subject to the provisions of this Investment Policy; and
• The Executive Director Finance & Administration is authorised to withdraw invested funds to the extent necessary to meet University liquidity requirements.
• The Executive Director Finance & Administration is authorised to withdraw and re-invest funds to the extent necessary to implement written advice from the Investment Consultant, provided that the asset allocation to individual sectors remains within the ranges specified in this policy.
• The Executive Director Finance & Administration must report to Finance Committee any withdrawal or re-investment made under clause 6.
• The Executive Director Finance & Administration is authorised to amend the benchmark index and schedules A & B of this policy to reflect minuted decisions made by Finance Committee.

6.2 Composition of Investment Funds

6.2.1 Treasury Funds

Treasury Funds comprise operating funds or treasury funds which should be managed in a risk averse manner. The basis for investment of these funds is that a loss of capital over a financial year would be undesirable.

Treasury Funds are managed on a twelve month investment horizon. The investment objectives for the Treasury Funds are:

• to produce a positive after fees return over each financial year; and
• to achieve, over rolling three year periods, an average after fees annual return that is at least equal to the benchmark return specified below.

The management is undertaken in a manner that minimises the risk of the investment producing a negative return over any financial year. Whilst this is the investment objective, it is recognised that in extreme market conditions, a negative return is possible.

Consistent with the nature of the funds and the investment objectives, the Treasury Funds will be invested in at call deposits with Tascorp. Short-term deposits will be invested with the University's Bank or Bank Accepted Bills.

6.2.2 Investment Funds

Investment Funds comprise all funds other than Trust Funds.

A longer-term investment horizon applies to these funds, with an objective to obtain a rate of return that is 3.5% above the rate of inflation (as measured by Headline CPI). Despite this objective, and although based on projected cash flows, a decline in market value in any one year should not be a major concern. Indeed strict adherence to this objective would unduly limit the ability of the fund to invest in more growth oriented assets.

The Investment Funds are held to meet capital and/or income endowments, prizes, scholarships and emerging superannuation liabilities. As a result the investment horizon is a longer-term horizon.

The investment objectives for the Investment Funds are:

• over rolling three year periods, achieve an average annual after fees return at least equal to the average increase in Headline CPI plus 3.5%; and
• over rolling three year periods, achieve an average before fees annual return that is at least equal to the benchmark return as specified below.

• Over rolling three year periods, achieve an average after fees annual return that is at least equal to the return on the UBS Bank Bill index.
• To limit the probability of a negative return to be no more than 1 in every 7 years.

Consistent with the nature of the funds and the investment objectives, broad allowable asset allocation ranges are shown in Schedule A.

6.3 Approved Investments

Investments approved by the Finance Committee are shown in Schedule B.

7. Responsibilities

8. Policy History

Schedule A: Investment Funds – Asset Allocation Ranges

Schedule B: General Fund – Approved Investments

Approved by Council on 8 April 2005
Amended by Resolution No. 05/3/37, 05/Circ3/1, 06/3/28 and 07/5/16

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