This Investment Policy Statement (“IPS”) was recommended by the Investment Committee to the Board of Directors of the Jackson Community Foundation (“Fund”) on March 13, 2022.
This purpose of the IPS is to outline the following general provisions affecting the Fund by:
The Fund’s mission is to bridge community needs with timely giving. The purpose is to lessen the burden of government for the City of Jackson, Missouri, and Cape Girardeau County, Missouri, and the trade area of Jackson, Missouri, by providing, but not limited to, the following: gifts, donations or below market rent to said governments and any donation of money, equipment or services (including subsidy of services) that would be perceived as having an improvement in the quality of life of the referenced area. Further definitions and additional language is contained in Section VI of the bylaws.
The primary investment objective is to preserve the long-term purchasing power of the Fund’s assets after accounting for spending. This means that the Fund intends to seek, on average, a minimum total annual rate of return equal to inflation plus actual Fund spending over a perpetual investment time horizon. In order to have an opportunity to meet this primary objective, a long-term investment perspective is required when formulating investment strategy and evaluating spending levels. (For purposes of this IPS, a “long-term investment perspective” is defined as more than 10 years.)
The Fund has a secondary objective to prudently diversify overall Fund risk as to mitigate the magnitude of intermediate-term investment losses that could jeopardize the Fund’s long-term mission. These investment objectives may be in conflict at times, so the Committee must find balance between them when formulating or revising investment strategy. (For purposes of this IPS, “intermediate-term” is defined as 5-10 years.)
The Board has established an annual spending policy based on which funds will be transferred annually to the Current Spending Fund. This transfer will be managed per the equation illustrated in Exhibit A, which is attached. From time to time, the Board may request additional extraordinary distributions from the Fund. The Board also reserves the right to temporarily deviate from this distribution policy if doing so is in the best interest of the Fund’s long-term purpose. The Fund’s long-term purpose should always be considered first by the Board in any decisions made which deviate from Exhibit A.
The Fund intends to limit investments with less than annual liquidity to no more than 17 percent of total portfolio assets. Total daily liquid assets are intended to exceed 80 percent of portfolio assets at the time of investment.
A minimum of 5 percent of total assets must be maintained in cash or cash equivalent investments.
There are no explicit prohibitions against investing a portion of the Fund’s assets in any asset class, investment strategy or investment manager structures, so long as the investment is;
The Committee intends to consider the explicit and implicit costs that may be incurred because of adding a new asset class, investment strategy, or investment manager structure and determine whether the merit of the investment justifies any applicable additional costs. Explicit costs include, but are not limited to, investment management fees, custody costs and additional audit expenses. Implicit costs include, but are not limited to, the cost of time and administrative resources that could be allocated elsewhere to improve the effectiveness of the Fund.
|Asset Allocation Parameters:||Lower Limit||Upper Limit|
|Cash or Cash Equivalents||5%||20%|
|Global Fixed Income Securities||10%||55%|
|Publicly Traded Global Equity||30%||78%|
The Committee acknowledges that the Fund’s asset allocation strategy is likely to be its primary determinant of performance. The Fund’s investment strategy involves diversifying among various asset classes, investment strategies and investment managers to pursue the Fund’s investment objective(s) while complying with its constraints.
While reserving the right to take timely advantage of long-term investment opportunities as they present themselves, the Committee intends to refrain from making dramatic shifts to the Fund’s investment strategy based on short-term capital market expectations.
Operating under a signed discretionary agreement the IA shall review or revise the target allocation to each asset class periodically to ensure the investment strategy remains consistent with the Fund’s investment objective. Absent a signed discretionary agreement; with the assistance of its Investment Advisor, the Committee intends to review or revise the target allocation to asset classes periodically to ensure the investment strategy remains consistent with the Fund’s investment objectives. In either scenario, any change to the investment strategy must remain consistent with the constraints of this IPS
With the assistance of its Investment Advisor, the Fund’s allocation will be monitored on a periodic basis to determine whether rebalancing back to its target allocation is warranted. This rebalancing process is likely to result in withdrawing from investments that have recently outperformed and/or adding to investments that have recently underperformed. With regards to periodic withdrawals (or contributions) that may be made to (or from) the Fund, partial rebalancing will have the objective of bringing the Fund closer to its target asset allocation.
In addition to achieving the investment objectives previously outlined in this Statement, the goal of the overall investment strategy is to meet or exceed (a risk-appropriate) benchmark over full market cycles. The benchmark will constitute underlying market indices appropriate for the strategy, and its components will be illustrated in the periodic performance report provided by the Investment Advisor. The Committee may also use additional performance benchmarks including, but not limited to, broader and/or more specific benchmarks made up of multiple underlying indices, peer group comparisons to similar Funds, inflation-adjusted absolute return benchmarks, or any other benchmark the Committee believes will further its evaluation of the Fund’s relative risk-adjusted performance.
The performance benchmark for this fund will be with the ranges of Morningstar’s Moderate Risk Portfolio and Morningstar’s Moderate Aggressive Risk Portfolio with +/- 1.5% on an Intermediate Term basis or Market Cycles.
The Fund may select investment managers through a variety of investment vehicles including, but not limited to, separate accounts, mutual funds, commingled funds, or private partnerships.
The underlying investment managers selected for the Fund are intended to be selected with the care, skill and diligence that would be applied by a prudent person acting in a like capacity and knowledgeable about investing. The Fund may also utilize low cost, passively managed investment products where appropriate.
The Investment Advisor using his or her discretion (should a discretionary agreement be in place with said Investment Advisor) shall allocate the funds among the various investment managers with ability to hire and fire all withing the boundaries of the Investment Policy Statement. If no discretionary agreement in force this duty shall be one of recommending to the committee.
The Investment Advisor will examine investment managers’ investment objectives and processes; historical adherence to stated objectives and processes; depth of resources; quality of personnel; historical performance (including risk) versus various appropriate benchmarks; appropriateness of diversification; reasonableness of fees; and any other metric that may be material when evaluating investment managers’ capabilities. If Investment Advisor does not have discretion, then this function will be completed with the Investment Committee.
Subject to the discretion of the Investment Advisor if there is a discretionary agreement in place. In addition, managers may be terminated at any time for any reason at the discretion of the Committee.
With the assistance of its Investment Advisor, the Committee intends to periodically review the performance of the underlying investment managers. Investment manager performance will be evaluated against proper indices, peer group comparisons, and risk-adjusted performance metrics. They will also be evaluated against other metrics that may include but are not limited to expenses, consistency of strategy or style, or other qualitative factors.
Investment managers may be considered for termination if they fail to meet performance or other guidelines enumerated in the Fund’s periodic performance report provided by the Investment Advisor. The performance summary section of the most recent performance report, including managers and their various benchmarks, will serve as an appendix to this IPS. Since several studies have demonstrated that most strong long-term performing investment managers suffer multi-year periods of underperformance, failure to meet performance or other qualitative guidelines will not automatically trigger a manager termination. With the assistance of its Investment Advisor, the Committee intends to use all known information and its best judgment to determine if and when terminating a manager is warranted. Events that may trigger a termination include but are not limited to illegal or unethical behavior on the part of the manager; failure to follow investment guidelines; turnover among key personnel; a change in investment style or strategy; insufficient infrastructure to keep pace with asset growth; significant increase in expenses or fees; and any other observation the Committee deems may prevent the manager from carrying out its duties effectively. In addition, managers may be terminated at any time for any reason at the discretion of the Committee.
The following is a summary of roles and responsibilities of various parties involved in overseeing or safeguarding the Fund’s assets:
Shall operate within the guidelines of the executed Wealth Management Agreement, this agreement would govern Investment Advisor Responsibility and Authority, to include;
In conducting the policies of this IPS, the Committee may rely on various service providers including, but not limited to, the Investment Advisor, trustee, custodian, administrative services provider(s), and investment managers. Such service providers shall be evaluated and selected based on the following:
For separately managed accounts, if applicable, investment managers will be expected to vote proxies in the best interest of the Fund as an investor. When applicable, mutual fund proxies are intended to be voted in the best interest of the Fund.