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TABLE OF CONTENTS
I General Information
A. Scope of Investment Policy 2
B. Purpose of Investment Policy 2
C. Definitions 3
D. Delegation of Authority 3
II Assignment of Responsibility
A. Investment Committee of the Board of Trustees 4
B. Responsibility of the Investment Consultant(s) 5
C. Responsibility of the Investment Manager(s) 6
III General Investment Principles
A. General Guidelines 6
B. Investment Management Policy 7
IV Spending Policy 7
V Investment Objectives
A. Goal of the Fund 8
B. Attitude towards Gifts 8
C. Capital Market Expectations 8
D. Liquidity 9
VI Investment Guidelines
A. Allowable Assets 9
B. Stock Exchanges 10
C. Prohibited Assets 10
D. Prohibited Transactions 10
E. Derivative Investments 10
VII Socially Responsible Investment Guidelines 11
VIII Asset Allocation Guidelines
A. Aggregate Fund Allocation 11
B. Diversification for Investment Managers 12
C. Guidelines for Fixed Income Managers 12
IX Selection of Investment Managers
A. Procedures 13
B. Investment Manager Review/Evaluation 13
X Investment Policy Review 13
Addendum 14
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C. DEFINITIONS
1. “Fund” shall mean the Antioch University Endowment Fund.
2. “Investment Committee” shall refer to the Investment Committee of the Board of
Trustees, which has been assigned the responsibility by the Antioch Board of Trustees
for administering the Fund in compliance with applicable law and Board of Trustee
policy.
3. “Fiduciary Responsibility” shall mean the exercise of discretionary authority or control
over Fund management or any authority or control over the management, disposition or
administration of the Fund assets.
4. “Investment Manager” shall mean any individual, or group of individuals, employed to
manage the investments of all or part of the fund assets.
5. “Investment Management Consultant” shall mean any individual or organization
employed to provide advisory services, including advice on investment objectives and/or
asset allocation, manager search, and performance monitoring.
6. “Securities” shall refer to the marketable investment securities, which are defined as
acceptable in this statement.
7. “Investment Horizon” shall be the time period over which the investment objectives, as
set forth in this statement, are expected to be met. The investment horizon for this Fund
is perpetuity.
D. DELEGATION OF AUTHORITY
The Investment Committee is responsible for directing and monitoring the investment manage
ment of Fund assets. The Investment Committee is also authorized to delegate certain
responsibilities to professional experts in various fields. These include, but are not limited to:
1. Investment Management Consultant. The consultant may assist the Investment
Committee in: establishing investment policy, objectives, and guidelines; selecting
investment managers; reviewing such managers over time; measuring and evaluating
investment performance; and other tasks as deemed appropriate.
2. Investment Manager. The investment manager may choose the specific securities that
will be used to meet the Fund’s investment objectives. Such services also include
economic analysis, and deciding when to purchase, sell, or hold individual securities.
3. Custodian. The custodian will physically (or through agreement with a sub-custodian)
maintain possession of securities owned by the Fund, collect dividend and interest
payments, redeem maturing securities, and effect receipt and delivery following
purchases and sales. The custodian may also perform regular accounting of all assets
owned, purchased, or sold, as well as movement of assets into and out of the Fund.
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3. Establishing reasonable and consistent investment objectives, policies and guidelines,
which will direct the investment of the Fund’s assets.
4. Prudently and diligently selecting qualified investment professionals, including Invest
ment Manager(s), Investment Consultant(s), and Custodian(s).
5. Regularly evaluating the performance of the Investment Manager(s) to assure
adherence to policy guidelines and monitor investment objective progress.
6. Developing and enacting proper control procedures: For example, replacing Investment
Manager(s) due to fundamental change in investment management process or for
failure to comply with established guidelines.
B. RESPONSIBILITY OF INVESTMENT CONSULTANT(S)
The Investment Consultant’s role is that of a non-discretionary advisor to the Investment
Committee. Investment advice concerning the investment management of Fund assets will be
offered by the Investment Consultant, and will be consistent with the investment objectives,
policies, guidelines and constraints as established in this statement. Specific responsibilities of
the Investment Consultant include:
1. Assisting in the development and periodic review of investment policy.
2. Providing asset allocation advice and recommendations to assist in meeting a long-term
strategic asset allocation target while adhering to allocation constraints such as maxi
mum and minimum exposures to various asset classes.
3. Conducting investment manager searches when requested by the Investment
Committee. .
4. Providing “due diligence”, or research, on the Investment Manager(s).
5. Monitoring the performance of the Investment Manager(s) to provide the Investment
Committee with the ability to determine the progress toward the investment objectives.
6. Communicating matters of policy, manager research, and manager performance to the
Investment Committee.
7. Reviewing Fund investment history, historical capital markets performance and the
contents of this investment policy statement to any newly appointed members of the
Investment Committee.
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B. INVESTMENT MANAGEMENT POLICY
1. Preservation of Capital – Consistent with their respective investment styles and phi
losophies, investment managers should make reasonable efforts to preserve capital,
understanding that losses may occur in individual securities.
2. Risk Aversion – Understanding that risk is present in all types of securities and invest
ment styles, the Investment Committee recognizes that some risk is necessary to
produce long-term investment results that are sufficient to meet the Fund’s objectives.
However, the investment managers are to make reasonable efforts to control risk, and
they will be evaluated regularly to ensure that the risk assumed is commensurate with
the given investment style and objectives.
3. Adherence to Investment Discipline – Investment managers are expected to adhere
to the investment management styles for which they were hired. Managers will be
evaluated regularly for adherence to investment discipline.
IV. SPENDING POLICY
The Investment Committee will attempt to balance the Fund’s shorter-term funding obligations
with its goal to provide campus and program support into perpetuity and, therefore, design a
spending policy that is prudent and predicable. However, in order to realize the greatest
appreciation of the Fund, the Investment Committee may tend toward a more “aggressive”
investment strategy seeking higher long-term investment returns than would be possible if
spending in a given year were linked directly to annual Fund income. Because expected
investment returns from “riskier” portfolios are not consistent and predictable over short
periods, the Investment Committee believes that shorter-term spending allocations must be
independent from short-term performance of the Fund. In this way, campuses and their
programs will be able to endure periods of under-performance without erratic changes in their
level of spending. In addition, a moderate spending policy will avoid excessive deterioration of
real principal.
The Investment Committee of the Board of Trustees recommends a spending rate and an
overall target return of not less than the following:
Spending Rate 5.0%
Fees 1.0%
Inflation (estimated) 2.0%
Real Growth Target 2.0%
Target Rate of Return 10.0%
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Expected return calculations for capital markets indices are based on historical annualized
performance (Post World War II), with the exception of the international indices. The expected
returns of the international indices represent a return premium approach. This premium
estimate is calculated comparing each international index against its domestic counterpart,
since the inception of the international indexes.
D. LIQUIDITY
To minimize the possibility of a loss occasioned by the sale of a security forced by the need to
meet a required payment, the Investment Committee will periodically provide investment
counsel with an estimate of expected net cash flow. The Investment Committee will notify the
investment consultant of cash needs sufficiently in advance to allow liquid reserves to be
developed.
VI. INVESTMENT GUIDELINES
A. ALLOWABLE ASSETS
1. Cash Equivalents
• Treasury Bills, Commercial Paper, CD’s, Bankers’ Acceptance Notes
• Money Market Funds
• Repurchase Agreements
2. Fixed Income Securities
• U.S. Government and Agency Securities
• Corporate Notes and Bonds
• Mortgage Backed Bonds
• Preferred Stock
• Fixed Income Securities of Foreign Governments and Corporations
3. Equity Securities
• Common Stocks
• Convertible Notes and Bonds
• Convertible Preferred Stocks
• American Depository Receipts (ADRs) of Non-U.S. Companies
• Stocks of Non-U.S. Companies (Ordinary Shares)
• Stocks of Non-U.S. Companies in emerging markets
• Listed Real Estate Investment Trust Securities
4. Mutual Funds
• Mutual Funds which invest in securities as allowed in this statement
5. The University may accept real estate (REITs) into the Fund if acquired as a gift.
B. STOCK EXCHANGES
To ensure marketability and liquidity, investment advisors will execute equity transactions
through the following exchanges: New York Stock Exchange, American Stock Exchange,
NASDAQ over-the-counter market, and foreign exchange markets. In the event that an Invest
ment Manager determines that there is a benefit or a need to execute .transactions in
exchanges other than those listed in this statement, written approval is required from the
Investment Committee.
C. PROHIBITED ASSETS
Prohibited investments include, but are not limited to, the following:
1. Commodities and Futures Contracts
2. Private Placements
3. Options
4. Limited Partnerships
5. Venture-Capital Investments
D. PROHIBITED TRANSACTIONS
Prohibited transactions include, but are not limited to, the following:
1. Short Selling
2. Margin Transactions
3. Securities Lending
E. DERIVATIVE INVESTMENTS
Derivative securities are defined as synthetic securities whose price and cash flow character
istics are based on the cash flows and price movements of other underlying securities. Most
derivative securities are derived from equity or fixed income securities and are packaged in the
form of options, futures, CMO’s (PAC bonds, lO’s, PO’s, residual bonds, etc.) and interest rate
swaps among others. The Fiduciary feels that many derivative securities are relatively new and
therefore have not been observed over multiple economic cycles. Due to this uncertainty, the
Fiduciary will take a conservative posture on derivative securities in order to maintain its risk-
adverse nature. Since it is anticipated that new derivative products will be created each year, it
is not the intention of this document to list specific derivatives that are prohibited; rather it will
serve as a general policy on derivatives. Unless otherwise specifically allowed in this docu
ment, the Investment Manager(s) must seek written permission from the Investment Committee
to include such investments in the Fund’s portfolio. The Investment Manager(s) must present
detailed information as to the expected return and risk characteristics of such investment
vehicles.
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S3Nn3QinO 1N3IAI1S3ANI 3iaiSNOdS3U ATIVIOOS MIA
Minimum
50%
5%
0%
25%
0%
Maximum
75%
15%
5%
50%
20%
Preferred
65%
10%
2.5%
‘30%
5%
1. Aggregate Fund Asset Allocation Guidelines (at market value)
Asset Class
Total Equities
International Equities
Emerging Markets
Fixed Income
Cash and Equivalents
2. The Investment Committee may employ investment managers whose investment disci
plines require investment outside the established asset allocation guidelines. However,
taken as a component of the aggregate Fund, such disciplines must fit within the overall
asset allocation guidelines established in this statement. Such investment managers
will receive written direction from the Investment Committee regarding specific
objectives and guidelines.
3. No more than 30% of the total Fund should be invested with any one equity manager
and no more than 50% of the total Fund should be invested with any one fixed income
manager.
B. DIVERSIFICATION FOR INVESTMENT MANAGERS
The Investment Committee does not believe it is necessary or desirable that securities held in
the Fund represent a cross section of the economy. However, in order to achieve a prudent
level of portfolio diversification, the securities of any one company or government agency
should not exceed 5% of the total fund, and no more than 20% of the total fund should be
invested in any one industry. Individual treasury securities may represent 50% of the total fund,
while the total allocation to treasury bonds and notes may represent up to 100% of the Fund’s
aggregate bond position.
C. GUIDELINES FOR FIXED INCOME MANAGERS
1. Fund assets may be invested only in investment grade bonds rated BBB (or equivalent)
or better.
2. Fund assets may be invested only in commercial paper rated A1P1 (or equivalent) or
better.
3. Fixed income duration restrictions are as follows:
• Maximum duration for any single security is 16 years.
• Weighted average portfolio duration may not exceed 8 years.
4. Money Market Funds selected shall contain securities whose credit rating at the abso
lute minimum would be rated investment grade by Standard and Poors, and/or Moody’s.
12
IX. SELECTION OF INVESTMENT MANAGERS
A. PROCEDURES
The Investment Committee selection of Investment Manager(s) must follow prudent due dili
gence procedures. A qualifying investment manager must be a registered investment advisor
under the Investment Advisors Act of 1940, or a bank or insurance company. The Investment
Committee requires that each investment manager provide, in writing, acknowledgment of
fiduciary responsibility to Antioch University.
B. INVESTMENT MANAGER REVIEW/EVALUATION
Performance reports generated by the Investment Consultant shall be compiled at least quar
terly and communicated to the Investment Committee for review. The investment performance
of total portfolios, as well as asset class components, will be measured against commonly
accepted performance benchmarks. Consideration shall be given to the extent to which the
investment results are consistent with the investment objectives, goals, and guidelines as set
forth in this statement. The Investment Committee intends to evaluate the portfolio(s) over at
least a three-year period, but reserves the right to terminate a manager for any reason including
the following:
1. Investment performance that is significantly less than anticipated given the discipline
employed and the risk parameters established, or unacceptable justification of poor
results.
2. Failure to adhere to any aspect of this statement of investment policy, including com
munication and reporting requirements.
3. Significant qualitative changes to the investment manager’s organization.
Investment managers shall be reviewed regularly regarding performance, personnel, strategy,
research capabilities, organizational and business matters, and other qualitative factors that
may impact their ability to achieve the desired investment results.
X. INVESTMENT POLICY REVIEW
To assure continued relevance of the guidelines, objectives, financial status and capital markets
expectations as established in this investment policy, the Investment Committee will review
investment policy at least annually.
The Investment Committee of the Antioch University adopts this statement of investment policy
on June 4, 1999.
Leressa Crockett, Chair Thomas R. Kershner James D. Robinson, IV
Bruce P. Bedford Niels P. Lyster
13
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