(1) The purpose of this policy is to set out: (2) This policy applies to: (3) The University Council has authority to make investments under the Charles Sturt University Act 1989. The investment activities of the University are constrained by any limitations specified by the NSW Treasurer and Minister responsible for education, the Charles Sturt University Act 1989 and any relevant regulation or motion passed by the University Council or authorised committee of the University Council. (4) The University’s investment objectives are to: (5) The University will establish the following layers or types of funds to meet its short, mid and longer-term cash needs: (6) The Chief Financial Officer (CFO) will make allocations to these funds based on the estimated cash flows and other periodical reports as stated in Part I of this policy. (7) The University is exempt from income tax. Imputation credits on dividends relating to Australian shares are fully refundable. (8) Responsibility for investment matters in the University are as follows: (9) The following principles and standards apply to members of the FIIC when engaging in investment activities: (10) FIIC members must declare any material financial interests in the institutions or activities, or any material conflicts of interest, that could be related to the performance of the University investment program. (11) In particular, where a member of the FIIC has a material financial interest or conflict of interest in a matter being considered or about to be considered at a meeting of the committee, this must be declared as stated in the Governance (Declaration of Material Interests) Rule 2022. (12) As part of its investment strategy, the University will seek to maximise returns whilst limiting exposure to risk to an acceptable level. (13) Risks to be considered include the following: (14) The FIIC can approve the use of other assets. (15) Strategic asset allocation benchmarks and ranges are as follows: (16) All investments in the short-term investment portfolio are to be invested in authorised deposit-taking institutions (ADIs) registered with the Australian Prudential Regulation Authority (APRA) to operate within Australia. (17) To ensure diversification and to manage risk, a minimum of 50% of the funds available within the short-term investment portfolio is to be invested with banks rated as A1+ by Standard and Poors (S&P). The balance may be held in banks rated at A1, with no single A1 institution to have more than 10% of the total short-term investment portfolio. The holdings test is applied at the time of purchase. Equivalent Moody’s ratings may be applied. (18) To maximise earnings, the short-term investment portfolio should not account for more than 40% of the funds available across the University investment portfolio, except for short durations where redemptions are awaiting reinvestment. (19) The investment return objective for the short-term investment portfolio is to match or outperform the average return of the RBA Cash Rate over rolling two year periods and after fees paid for investment management. The CFO may determine the benchmark for particular classes of investment or where managed under a fund where this is considered appropriate. (20) The strategic asset portfolio is broadly defined as a portfolio of 75% growth assets and 25% defensive assets. This will be allocated into sub-asset classes within the agreed implementation consultation process. (21) The following table provides a guide current target strategic asset allocation. The individual components may vary due to the views of the investment manager, based on the expected market environment (resulting in a target dynamic asset allocation), as communicated to the CFO, however the broad pro-growth strategy remains the overarching mandate. The ranges provided as maximum movements away from the portfolio’s target allocations (whether strategic or dynamic) before the allocations are rebalanced to the target allocation (defined as being strategic or dynamic, whichever is in place). (22) The overall investment return objective for the long-term investment portfolio is to match or outperform the average return of CPI plus 4% pa over rolling seven year periods after deduction of investment fees paid for investment management. (23) The secondary benchmark (which has high importance) is that the performance of the investment managers used by the implemented consultant will be assessed against an aggregation of the benchmarks of the asset classes used within the strategic asset allocation to ensure a value added investment process. Similarly the allocation process between different asset classes, as undertaken by the implemented consultant will be assessed, over time for value addition. (24) The University may hold investments that are not held purely for financial gain, but rather may be held for purposes such as involvement in research, development or commercialisation of a new technology, or supporting the business of the University in a non-financial manner. Such investments shall be separately identified as ‘other asset holdings’ on the register of investments. (25) The strategic asset allocation benchmark and ranges for the Charles Sturt University Foundation Trust (Foundation) is as follows: (26) The overall investment return objective for the Foundation portfolio is to achieve an overall return of CPI plus 4% pa over rolling seven year periods. (27) In addition, the secondary benchmark (which has high importance) is that the performance of the investment managers used by the adviser will be assessed against an aggregation of the benchmarks of the asset classes used within the strategic asset allocation to ensure a value added investment process. (28) To reflect the requirements of the Foundation, an annual cash drawdown is also required, and this amount will be determined by the CFO in consultation with the investment adviser. (29) Each asset class should be diversified among fund managers with a bias toward investment grade. (30) The share portfolio should be diversified with holdings being spread across industry sectors. The FIIC may establish sector class allocations to apply and for subsequent review. (31) International shares will only be acquired through a fund manager or as part of a managed fund. (32) For fixed income investments, considerations will be given to the rating and duration when making investment decisions. (33) Unlisted property trusts pertaining to a single property must have an independent property valuation at the time of investment. Unlisted property trusts should be managed by a highly reputable property manager with a long history of success. (34) Directly held residential property assets are not assets intended for the support of teaching or research activities, although they may temporarily support these functions and other University functions. Such assets must be part of a plan and be capable of being resold. The acquisition and disposal of such assets will require University Council approval and must include an independent valuation. For the avoidance of doubt, Hatherly House (the Vice-Chancellor's residence) is not considered to be an asset available for disposal. (35) Consideration should be given to hedging the foreign currency exposures associated with relevant investments. The CFO will seek advice from the investment adviser to determine the appropriateness of using hedged investment funds. (36) The strategic asset allocation benchmark percentages are designed to be sustainable over time. Performance expectations are to be reviewed as relevant by the CFO and alternative benchmarks may be considered for particular investments where this is considered more appropriate. These changes will be reported to the FIIC. (37) The CFO will monitor investment performance, including the performance of appointed implemented consultants, advisers and fund managers in relation to the agreement and the objectives of the fund or pool to which it relates. This will include: (38) Periodically, the FIIC will be provided with reports from the chair of the CFO that contain: (39) The FIIC will review this policy every second year. (40) Nil. (41) Refer to Responsible Investment Guidelines. (42) Nil.Investment Policy
Section 1 - Purpose
Scope
Section 2 - Policy
Part A - Objectives
Part B - Funds
Part C - Taxation
Part D - Roles and responsibilities
Part E - General investment principles and ethical standards
Conflicts of interest
Part F - Volatility and risk
Part G - Asset allocation
Allowable assets
Cash and cash equivalents
Bank accounts - at call accounts – term deposits
Fixed income securities
Government and government agency securities - bank bills - corporate notes and bonds - tier 1 subordinated debt - derivative credit products - preferred stock - fixed income managed funds
Equities
Australian shares including listed property trusts - share funds - international shares - convertible notes and bonds - convertible preferred shares
Property trusts
Listed property trusts – unlisted property trusts
Realty assets
Land - residential and commercial real estate
Alternative assets
Investments via managers in infrastructure, private equity, private debt and other managed assets which contribute to the diversification of the investment portfolios.
Short term investment portfolio
Asset class
Strategic benchmark %
Ranges %
Current and at call accounts
20
Flexible, conditional on the liquidity requirements of the University.
Term deposits and cash management Accounts
80
50 - 90
Total
100
Long term investment portfolio
Asset class
Strategic benchmark %
Range tolerance
Australian large cap shares, including listed property trusts
30
+/- 5%
+/-3% for greater than 15% allocation, tapering to +/- 1% for 2% allocation
Australian small cap shares
7
Global large cap shares
8
Global large cap shares (Hedged)
8
Global small cap shares
6
Emerging market shares
5
Australian listed property
2
Australian direct property
5
Global unlisted infrastructure
2
Global listed infrastructure
2
Australian securities inflation plus
4
Australian government bonds
7
Developed markets non-government bonds (hedged)
6
Global high yield (hedged)
3
Emerging market debt
5
Cash
Total growth assets
75
Total defensive assets
25
Unlisted assets exposure
7
Other asset holdings
Charles Sturt University Foundation Trust investment portfolio
Asset class
Strategic benchmark %
Ranges %
Australian shares, including listed property trusts
25
0 – 40
International shares
20
0 - 35
Fixed income securities, incl. cash
15
5 - 50
Unlisted property trusts
25
5 - 35
Infrastructure
5
0 - 15
Alternative strategies
10
0 - 20
Total
100
Specific asset allocation requirements
Part H - Investment performance monitoring
Part I - Reporting and oversight
Part J - Review of policy
Section 3 - Procedures
Section 4 - Guidelines
Section 5 - Glossary
Section 6 - Document context
Compliance drivers
Review requirements
Biennial review
Document class
Governance
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Dynamic asset allocation range tolerance:
Rebalancing range tolerance: