The investment portfolio of Hall Memorial Library was established to manage the long term assets of the library. Contributions to the fund are accepted through personal contributions and various fundraising efforts. The primary purpose of this investment portfolio is for capital improvements.
Statement of Responsibilities
The Hall Memorial Library Trustees will determine appropriateness of investment policy on a regular basis. Changes to asset allocation, investment philosophy, investment risk and the general purpose of the investment portfolio will be determined by theTrustees. They will determine the effectiveness of the investment manager based on criteria stated in this investment policy.
The investment manager will be responsible for the execution of the investment policy. In addition, the investment manager will be responsible for day to day management of portfolio assets including deciding on specific investment selection, and timing of purchases and sales. The investment manager will provide the Trustees with market and economic data and well as forecasts for review on a agreed upon schedule.
Investment Goals and Objectives
The investment goals of the Hall Memorial Library investment portfolio are as follows:
To protect and preserve the principal (principle)amount, minimizing risk by:
Holding value in down markets.
Avoiding speculative issues.
Emphasizing stability of returns.
To provide increasing income from the investment portfolio, without invading principal.
To manage for long term results. Neither high turnover nor emphasis on the short term are encouraged.
To meet or exceed the rate of return of a balanced market index comprised of the S&P 500 stock index, Lehman Government/Corporate bond index, and the U.S. Treasury Bills in similar proportion to the asset allocation policy of the investment portfolio.
To meet or exceed the risk-free rate of return (as represented by the U.S. Treasury Bills).
To meet or exceed the inflation rate (as measured by the Consumer Price Index) by 300 basis points per year on average.
Prudent Person Rule: Investments are to be made consistent with the safeguards and diversity to which a prudent investor would adhere, exercising judgment and care, under the circumstances prevailing, which men of ordinary prudence would employ in the management of their own affairs not in regard to speculation, but to he permanent disposition of their funds, considering both income and safety of capital.
Liquidity: The investment portfolio’s cash flow will be monitored on a regular basis by the investment manager, and sufficient liquidity should be maintained to fund payment outflows. When withdrawals become necessary, the Trustees will notify the investment manager as far in advance as possible to allow sufficient time to build up necessary liquid reserves. The investment manager will be expected to review the cash flow requirements with the Trustees as stated in the investment policy.
Volatility: Consistent with the desire for adequate diversification, investment policy for the investment portfolio is based on the assumption that the volatility of the portfolio will be similar to that of the market. Consequently, it is expected that the volatility of the total portfolio, in aggregate, will be reasonably close to the volatility of a balanced market index weighted to match the actual asset mix of the investment portfolio.
Asset Allocation Guidelines
It shall be the policy of the investment portfolio to invest the assets in accordance with the maximum and minimum range for each asset category as stated below:
Types of Equity Securities: Equity securities shall mean mutual funds selected from the expanded approved mutual fund list or individual stocks from the S&P 500.
Diversification: The equity portfolio should be well diversified to avoid undue exposure to any single economic sector, industry group, mutual fund or individual security.
Capitalization: Mutual funds or individual securities will comprise of market capitalizations consistent with small, mid and large cap accepted values.
Security Concentration: It is expected that the equity component of the portfolio will be diversified across economic sectors, with no sector comprising more than 25% of the portfolio.
Inv. Grade Corp.
Types of Securities: Funds not invested in cash equivalents (securities maturing in one year or less) shall be invested entirely in marketable debt securities issued by either the United States Government, or agencies of the United States Government, domestic corporations, including industrials and utilities, and domestic banks and other United States financial institutions.
Quality: The quality of fixed income securities shall range from high yield or low rated fixed income investments to fixed income securities guaranteed by the United States Government.
Maturity: The maturity of fixed income securities will be proactively managed based on current and future analysis of interest rate environment. Accordingly maturities will range from short term of 1 year or less to longer term not exceeding 15 years.
Investment Performance Review and Evaluation
Performance results will be measured on a semi-annual, and / or annual basis.
Total fund performance will be measured against a balanced index composed of commonly accepted benchmarks weighted to match the long-term asset allocation policy of the investment portfolio.
The investment performance of the total portfolio and equity and fixed income segments (both in terms of return and risk) will be measured against commonly accepted benchmarks.
Total fund performance will be compared to a representative universe of professionally managed funds with the percentage of equity, fixed income, and cash equivalents to be indicative of the long-term asset allocation policy of the investment portfolio.
The investment manager has full discretion within the above guidelines.
The investment manager shall report to the Trustees on all pertinent details including:
Name and quantity of each security purchased or sold, with the purchase price and transaction date;
an analysis of each security, of its descriptions, percentage of total portfolio, purchase date, quantity, average cost basis, current market value. unrealized gain or loss, and indicates annual income and yield (%) at market; and
an analysis for the entire portfolio of the current asset allocation by investment category (equities, fixed –income securities and cash reserves).
Meet at least annually with the Trustees or as requested.
Review past performance, evaluate the current investment outlook, and discuss investment strategy.
Provide information regarding major changes in investment policy that may result in major investment strategy changes.
Review any significant changes in management, research, personnel or ownership within investment management firm.
Other communications that the investment manager feels are necessary to facilitate achievement of the objectives and goals of the (investment) portfolio.
Investment manager will be available for telephone consultation on a reasonable basis.