Help Wanted: Investment Manager(s)

by Warren Kane, Chairman, District Finance Committee

At the District Convention in Dover, DE the Board of Trustees approved an Investment Policy for the Capital District's reserve funds. The District has approximately $405,000 in retained funds of which $175,000 is in a mandated reserve of 1.0 times the current operating budget plus another $230,000 above the mandated reserve.

The approved policy follows but the mandated reserve is required to be invested in fixed income assets on a ladder schedule of certificates of deposit distributed between financial institutions so that all investments are below the FDIC insurance level.  The additional funds in the reserve may be invested in either fixed income or equities as determined by the District Finance Committee but equities shall not exceed 50% (based on cost) unless authorized by the Board of Trustees. The balance of the additional funds shall be invested in fixed income (CDs, investment grade corporate bonds or government securities).

The purpose of this policy is to improve the yield of the funds in the reserve by investing them with care, skill, prudence and circumstances that a "prudent man" acting in a like capacity and familiar with such matters would use in investing in a fund of like character and aim.

The District Finance Committee invites proposals from persons or firms to be the Investment Manager(s) of these funds. The proposals should outline the strategy to be followed, the estimated income as well as the costs to manage the portfolio, and the resources of the firm. The Committee will then review the proposal for adherence to the District Investment Policy, as well as the aims of the policy, and make a recommendation to the Board of Trustees.

Proposals should be submitted electronically, to facilitate the Committee's review, to warrenkane@aol.com by October 20, 2009. We hope to have a recommendation ready for the Board's meeting on November 14, 2009.

The approved Investment Policy in the Capital District Policy Statements is as follows:

Section 15 Finances (New)

1. Reserves. The Capital District shall retain funds in reserve in an amount equal to 1.0 times of the current annual operating budget of the Capital District.
2. Investment Policy. The fiduciary responsibility for the resources of the Capital District of Kiwanis International shall reside with the Board of Trustees.
• The Board of Trustees, with the advice of the District Finance Committee, shall appoint an Investment Manager(s) who shall have the power to invest the reserve funds of the Capital District in accordance with the District Policy Statements. The investment manager shall not be a current member of the District Board or District Finance Committee.
• The performance of investments shall be reviewed by the Board of Trustees at each regularly scheduled Board meeting. The District Finance Committee shall provide the basis of this review by submitting a quarterly report to the Board.
• The Capital District Board of Trustees has the authority to invest reserve funds of the District utilizing the advice and recommendations of the District Finance Committee. The assets shall be invested with care, skill, prudence and circumstances that a "prudent man" acting in a like capacity and familiar with such matters would use in investing in a fund of like character and aim. The investment manager shall invest funds of the Capital District in such securities and other investments in accordance with guidelines hereinafter delineated.
• The Capital District Finance Committee shall monitor all investment activities and review all activities at least quarterly and submit a quarterly report to the Board of Trustees.
• The Investment Manager shall follow a philosophy that utilizes a strategic approach to asset management based upon the fundamental economic and market environment for the purpose of providing the highest rate of return, lower risk and to minimize the volatility of results.
• The investment objectives shall be to provide, through active management, long term results that equal or exceed various investment indices, that is common stocks, the Standard & Poor's 500 Index, Lipper Bond Index, Intermediate Government/Corporate Bond Index or similar.
• Investment guidelines will be a mixed asset approach. Guidelines shall be developed in conjunction with the investment manager(s) and shall be reviewed periodically to insure compliance with the overall investment philosophy.
• Assets shall be invested in a manner consistent with the safeguards and diversity that a prudent investor should adhere to and all transactions undertaken on behalf of the account must be for the sole interest of the Capital District of Kiwanis International.
  • Assets equal to the mandated reserve shall be invested in fully insured fixed income assets, to include a ladder schedule of certificates of deposit, treasury or U.S. Government agencies. Investments shall be distributed among financial institutions so that all investments are below the maximum insured limit of the Federal Deposit Insurance Corporation (FDIC).
  • Funds in excess of the required reserve may be invested in either fixed income or equities. The amount of funds invested in equities may be determined by the District Finance Committee but shall not exceed 50% (based on cost) unless authorized by the Board of Trustees. The balance of funds shall be invested in fixed income (CD's, investment grade corporate bonds or government Securities).
  • No industry group/sector may constitute more than 10% of the assets of the portfolio. The maximum maturity of any fixed income security will be 10 years and the average maturity of all fixed income securities will not exceed five years.