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HomeMy WebLinkAboutStatement Of Investment Policy Objectives And Guidelines Augusta Richmond GA DOCUMENT NAME: stctt errer.t . D~ 'flIJe':St\\i\ff\-t- I=b \ \ c.y doy>C-D\JES "qu-weAHl es DOCUMENT TYPE: YEAR: ~ BOX NUMBE~: ~ FILE NUMBER: ~ ~l.\ \0 NUMBER OF PAGES: \L\ '" " .... , ',. Statement of Investment Policy. Objectives and Guidelines AUGUST A, GEORGIA PENSION FUNDS Janu~ry 1998 STATEMENT OF PURPOSE The purpose of the City of Augusta 1949 Pension Fund, Richmond County 1945 Pension Fund, and Richmond County 1977 Pension Fund (hereinafter referred to as the Pension Funds) is to provide pension benefits to qualified participants and their beneficiaries. In generaL the purpose of this document is to outline a philosophy and attitude which will guide the investment management of the assets towards the desired results. It is intended to be sufficiently specific to be meaningfuL yet fleXIble enough to be practical. GENERAL INVESTMENT PRINCIPLES 1. Investments shall be made solely in the interest of the beneficiaries of the Pension Funds, 2. The Funds shall be invested with the care, skill. prudence, and diligence under the circumstances then prevailing that a prudent man acting in like capacity and familiar with such matters would use in the investment of a fund of like character and with like aims, 3. Investment of the Funds shall be so diversified as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so. 4. The Trustees may employ one or more investment managers of varying styles and philosophies to attain the Funds' objectives. 5. Cash is to be employed productively at all times, by investment in short term cash. equivalents to provide safety, liquidity, and return. DELEGATION OF AUTHORITY The Trustees delegate the investment management duties for all or some part of the Funds to one or more professional investment manager(s) who shall be guided by the overall investment policy guidelines established by this policy statement. The Trustees delegate to the Investment Conunittee the authority to select, retain, or terminate professional investment manager( s). Page I . ~ " INVESTMENT OBJECTIVES In order to meet its needs, the investment strategy of the Pension Funds is to emphasize total return; that is, the aggregate return from capital appreciation and dividend and interest income. Specifically, the primary objective in the investment management for the Pension Funds assets shall be: Long- T enn Growth of Capital - To emphasize long-term growth of principal while avoiding excessive risk. Short-tenn volatility will be tolerated in as much as it is consistent with the volatility of a comparable market index. Preservation of Capital - To minimize the probability of loss of principal over the investment horizon. Emphasis is placed on minimizing return volatility rather than maximizing total return. Income and Growth - To achieve a balanced return of current income and modest growth of principal. The Funds' absolute minimwn annual rate of return objective shall be the actuarial assumption. The current actuarial assumption is 8.0%. The investment objectives above relate to the aggregate Fund. They are not meant to be imposed on each investment account (if more than one account is used). The goal of each investment manager, over the investment horizon, shall be to: 1. Approximate market index, or blended market index, selected and agreed upon by the Trustees that most closely corresponds to the style of investment management. ~ Equity Manager--approximate the S&P 500 Stock, Russell 1000 Value or Russell 1000 Growth Index, depending on manager investment style. ~ Bond Manager--approximate the LB Govt/Corp. Bond Index 2. Display an overall level of risk in the portfolio which is consistent with the risk associated with the benchmark specified above. Risk will be measured by the standard deviation of quarterly returns. Specific investment goals and constraints for 'each investment manager, if any, shall be incorporated as part of this statement of investment policy. Each manager shall receive a written statement outlining his specific goals and constraints as they differ from those objectives of the entire Fund, Page 2 r.; :;; .; MARKETABILITY OF ASSETS The Trustees require that all of the Funds assets be invested in liquid securities, defined as securities that can be transacted quickly and efficiently for the Funds, with minimal impact on market price, The use of derivative securities or other synthetic products whose prices are subject to potentially high volatility and whose returns are speculative or leveraged, or whose marketability may be limited, is prolnbited. INVESTMENT GUIDELINES ADowable Assets 1. Cash Equivalents ~ Treasury Bills >> Money.Market Funds >> STIF Funds >> Commercial Paper >> Banker's Acceptances . >> Repurchase Agreements ~ Certificates of Deposit . 2. Fixed Income Securities ~ U.S. Government and Agency Securities >> Corporate Notes and Bonds >> Mortgage Backed Bonds >> Preferred Stock >> Planned Amortization Class Collateralized Mortgage Obligations (PAC CMOs) or other "early tranche" CMOs 3, Equity Securities ~ Common Stocks >> Convertible Notes and Bonds >> Convertible Preferred Stock >> American DepositOlyReceipts (ADRs) ofNon-U.S, Companies 4. Mutual Funds >> Mutual Funds which invest in securities as allowed in this statement. Page 3 J' .' INVESTMENT COMMITTEE I" . An Investment Committee shall be. created to monitor performance and oversee the implementation of the Investment Policy Statement. This consist of the following members: Mayor, Mayor-Pro Tern, Ch: Administrator, and Comptroller. The Comptroller is appointed as agent ( and authorized to take any administrative action necessary in sUpPO! Statement. . '.,:. ~.;" . '........ . : ".;:" '. ..,- '--." ..~. ."," . '. ....;...... INVESTMENT MANAGER PERFORMANCE REVIEW AND E" . . . -' ._~ . ..- + . . .'. .'~ ~ . , .' ....: "". : ~:~. '. ..,". "',-' Performance reports generated by the Investment Consultant shall be cc communicated to the Trustees for review. The investment performance asset class components, will be measured against commonly accepte( Investment managers shall be reviewed quarterly regarding performance. capabilities, organizational and business matters, and other qualitative . ability to achieve the desired investment results. All internal controls, in- reports, and docwnentation shall be reviewed annually by an independent INVESTMENT POLICY REVIEW ,...-....-.: To assure continued relevance of the guidelines, objectives, financia expectations as established in this statement of investment policy, f investment policy at least annually. This statement of investment policy is adopted by the Commissioners meant to supersede all previously adopted Investment Policy Statements /6 (1 . Established this (p day of O'.....4.(}lj , 1998 f:- ~ C~\)/qJ~ Tllla doeurntnl . ~if: ~. ... -- .::.':Y' .' DATE: It/f~>> /l estor's s ature . .' -, ..~ ......,. '.. . ..-' ~ .... - . . . Lena J. Bonner Attestor's typed name Clerk of Commission Title of attestor Page 5 ~ ... - ..-ri,"'- r ... --.. ~. -;- 'ORDINANCE NO. hOt) C) AN ORDINANCE TO AMEND THE 1945 RICHMOND COUNTY EMPLOYEES' PENSION FUND ACT (GA, L. 1945, pp. 748, AS AMENDED BY GA. L. 1949, p. 1982: GA. L. 1951, p, 3234; GA. L. 1953, p. 2624; GA, L, 1966, p. 3360; GA. L. 1971, p. 3381; GA. L, 1976, p. 4500; GA, L. 1980, p. 4606; GA, L, 1985, p, 5194; GA. L. 1990, p, 5290; GA, L. 1993, p. 5438; GA. L. 1997, P. 4642; GA. L. 1997, P. 4705, ENACTED PURSUANT TO THE PROVISIONS OF THE CONSTITUTION OF THE STATE OF GEORGIA THAT PROVIDE FOR HOME RULE FOR COUNTIES; SO AS TO REVISE THE PROVISIONS REGARDING INVESTMENT OF THE FUND; TO REPEAL CONFLICTI~G ORDINANCES; TO PROVIDE AN EFFECTIVE DATE; AND FOR OTHER PURPOSES. BE IT ORDAINED BY THE AUGUSTA-RICHMOND COUNTY COMMISSION, AS SUCCESSOR TO THE BOARD OF COMMISSIONERS OF RICHMOND COUNTY, GEORGIA, AND IT IS HEREBY ORDAINED BY AUTHORITY OF THE SAME AS FOLLOWS: Section 1. The Richmond County Employees' Pension Fund Act. (Ga. L. 1945, p. 748, as amended by Ga. L. 1949, p. 1982; Ga. L. 1951, p, 3234; Ga, L. 1953, p, 2624; Ga. L, 1966, p, 3360; Ga. L, 1971, p. 3381; Ga. L. 1976, p, 4500; Ga. L, 1980, p, 4606; Ga. L. 1985, p. 5194; Ga. L, 1990, p. 5290; Ga, L. 1993, p. 5438; Ga. L, 1997, p. 4642; Ga. L, 1997, p. 4705) is hereby amended by deleting the fourth paragraph of Section 5, to wit: The Commission-Council is authorized to deposit the funds held by it with any bank located in Richmond County, Georgia, as depository. The Commission-Council shall have the authority to invest and re-invest money which is held for the purpose of paying pensions, but which is not needed for.the immediate payment thereof, as determined by the Commission-Council, in securities of the United States of America, including securities of agencies of said government; of the State of Georgia; of Richmond County; or any other county or municipality of the State of Georgia; or insured savings in savings and loan associations and state and national Banks; corporate bonds and debentures rated "AA" or better according to Moody's or Standard & Poor's rating at the time of the investment; corporate stocks which are non-assessable; dividend paying stocks,' common or preferred, in corporations having an "A" rating or better according to Standard & Poor's index current at the time of the investment, provided ,d-' .= ~ " " cash dividends of such common stocks have been' paid out of current earnings in at least two of the last three years preceding the purchase, provided however, that the Fund shall not own more than fifteen (15%) percent of the issue [sic] and outstanding shares of anyone corporation. and substituting therefor the following: The comptroller shall be the custodian of such fund and shall deposit the same in a bank or banks, and, pursuant to the direction of the pension fund investment committee, which committee shall consi-st of the members of the Augusta-Richmond County. commissi6fri~ shall invest and reinvest, from time to ti'me, any ~-- portion thereof not immediately needed for the payment of pensions, in securities approved by law for the investment of trust funds; and, in such securities other than those specifically approved by law for the investment of trust funds, as the pension fund investment committee shall deem proper, from tim~ to time; provided, however, that the amount of the pension fund which may be invested in such securities other than those specifically approved by law for the investment of trust furids may not exceed fifty percent (50%) of the total amount of the fund then outstanding; and in addition thereto, the investment committee ~ay invest such funds in bonds and debentures assumed or guaranteed by any solvent corporation or institution existing under the laws of the United States of America, or any state thereof, provided such bonds or debentures are rated at the time of their purchase, by a nationally recognized securities rating service, as AAA (Aaa), AA (Aa) or A (a) or in lieu thereof, provided such bonds or debentures are the type in which domestic life insurance companies are permitted to invest under the provisions of Section 33-11-20 of the Official Code of Georgia Annotated (Ga. Code Ann. ~ 56- 1016), as amended. The amount of the pension fund which may be invested in the bonds and debentures of any once corporation may not exceed ten percent (10%) of the total amount of such fund then outstanding. Section 2. Richmond County Constitution of by counties. This ordinance is adopted by the Augusta- Commission pursuant to the provisions of the the State of Georgia which provide for home rule Section 3. All laws or ordinances or parts of laws or ordi- nances in conflict with this ordinance are hereby repealed, Section 4. This ordinance shall become effective upon its ,;~. ~ .. -. . -, being filed with the Secretary of State of Georgia and with the Clerk of Superior Court of Richmond County, Georgia, in accordance with all applicable law. ADOPTED this 30th 6th day of January AI!d'~ 7Jl/ ~ lerk day of December , 1998. ; 1997 and this Commission By: ~ I, the undersigned, LENA BONNER, CLERK, do hereby certify that the foregoing is a true and correct copy of an ordinance adopted by the said Augusta-Richmond County Commission at two consecutive meetings, held, on the following dates, to-wit: December 30 , 1997, and January 6th , 199';, as the same appear on the minutes of said Commission. This 6th day of Janua~dg~ rk -:_. . ,}':'" -: ;:~.. Statement of Investment Policy Objectives and Guidelines AUGUSTA, GEORGIA PENSION FUNDS , 1997 STATEMENT OF PURPOSE The purpose of the City of Augusta 1949 Pension Fund, Richmond County 1945 Pension Fund. and Richmond County 1977 Pension Fund (hereinafter referred to as the Pension Funds) is to provide pension benefits to qualified participants and their beneficiaries. In generaL the purpose of this document is to outline a philosophy and attitude which will guide the investment management of the assets towards the desired results. It is intended to be sufficiently specific to be meaningfuL yet fleXIble enough t<;> be practical. GENERAL INVESThIENT PRINCIPLES 1. Investments shall be made solely in the interest of the beneficiaries of the Pension Funds. 2, The Funds shall be invested with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in like capacity and familiar with such matters would use in the investment of a fund of like character and with like aims, 3, Investment of the Funds shall be so diversified as to minimize the risk of large losses, unless under the circumstances it is c1~arly prudent not to do so. 4. The Trustees may employ one or more investment managers of varying styles and philosophies to attain the Funds' objectives, 5. Cash' is to be employed productively at all times, by investment in short term cash equivalents to provide safety, liquidity, and return. DELEGATION OF AUTHORITY The Trustees delegate the investment management duties for all or some part of the Funds to one or more professional investment manager(s) who shall be guided by the overall investment policy guidelines established by this policy statement. The Trustees delegate to the Investment Committee the authority to select, retain, or tenninate professional investment manager(s). Page 1 ~ '" . INVESTMENT OBJECTIVES In order to meet its needs. the investment strategy of the Pension Funds is to emphasize total return; that is, the aggregate return. from capital appreciation and dividend and interest income. Specifically. the primary objective in the investment management for the Pension Funds assets shall be: Loml- Term Growth of Capital - To emphasize long-tenn growth of principal while avoiding excessive risk. Short-term volatility will be tolerated in as nmch as it is consistent with the volatility of a comparable market index. Preservation of Capital - To minimize the probability of loss of principal over the investment horizon. Emphasis is placed on minimizing return volatility rather than maximizing total return, Income and Growth - To achieve a balanced return of current income and modest growth of principal. The Funds' absolute minimum annual rate of return objective shall be the actuarial assumption. The current actuarial assumption is 8,0%, The investment objectives above relate to the aggregate Fund. They are not meant to be imposed on each investment account (if more than one account is used). The goal of each investment manager, over the investment horizon, shall be to: . 1. Approximate market index. or blended market index. selected and agreed upon by the Trustees that most closely corresponds to the style of investment management. ~ Equity Manager-approximate the S&P 500 Stock, Russell 1000 Value or Russen 1000 Growth Index. depending on manager investment style. > Bond Manager-approximate the LB Govt/Corp. Bond Index 2. Disp41y an overall level of risk in the portfolio which is consistent with the risk associated with the benchmark specified above. Risk will be measured by the standard deviation of quarterly returns. . Specific investment goals and constraints for each investment manager, if any, shall be incorporated as part of this statement of investment policy. Each manager shall receive a written statement outlining his specific goals and constraints as they differ from those objectives of the entire Fund. Page 2 , ,. - 'to .. -r"-.... MARKETABILITY OF ASSETS The Trustees require that all of the Funds assets be invested iri liquid securities, defined as securities that can be transacted quickly and efficiently for the Funds, with minimal impact on market price, The use of derivative securities or other synthetic products whose prices are subject to potentially high volatility and whose rerurns are speculative or leveraged, or whose marketability may be limited, is prombited. . INVESTMENT GUIDELli~ES Allowable Assets 1, . Cash Equivalents >- Treasury Bills >- Money Market Funds . >- STIF Funds, , >- Commercial Paper ,. Banker's Acceptances ,. Repurchase Agreements ,. Certificates of Deposit 2, Fixed Income Securities >- V.S, Government and Agency Securities >- Corporate Notes and ~onds >- Mortgage Backed Bonds >- Preferred Stock . >- Planned Amortization Class Collateralized Mortgage Obligations (pAC CMOs) or other "early tranche" CMOs 3, Equity Securities ;, Common Stocks ,. ConvertIble Notes and Bonds >- Convertible Preferred Stock ,.' American Depository Receipts (ADRs) of Non- V,S. Companies 4, Mutual Funds >- Mutual Funds which invest in securities as allowed in this statement. Page 3 .. , ' .... --~ ..-" ..~_._--- Asset ADocation Guidelines Investment management of the assets of the Pension Funds shall be in accordance with the following asset allocation guidelines: 1. Aggregate Fund Asset Allocation Guidelines (at market value) Asset Class Equities Fixed Income Cash and Equivalents Minimum 20% 20% 0% Maximum 50% 60% 20% Preferred 45% 50% 5% 2, The Trustees will employ investment managers whose investment disciplines 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 n this statement. Such investment managers will receive written direction from the Trustees regarding specific objectives and guidelines. DIVERSIFICATION AND RISK PARAJ."IETERS The Trustees recognize that virtually all investments entail some degree of risk. and also understand that defining risk for the Funds' assets is not a precise science. However, to establish a general risk tolerance for the Funds, the Trustees have determined that high quality investments providing an opportunity for modest growth of capital are essential While the Funds as a whole should project a generally conservative identity, limited use of more aggressive investments is pennissible for diversification purposes, However, in order to achieve a prudent level of portfolio diversification. the securities of any one company should not exceed 5% of the total Fund. and no more than 20% of the total Fund should be invested in anyone industty, Guidelines for Fixed Income Investments and Cash Equivalents 1, The ~ension Funds assets may be invested only in investment grade boIids rated A or better by both Standard and Poors and Moody rating agencies. ~~ 2, Fixed income maturity restrictions are as follows: ). Maximum maturity for any single security is 30 years, ~ Weighted average portfolio maturity may not exceed 15 years, 3, Money Market Funds selected shall contain securities whose credit rating at.the absolute minimum would be rated inve~t grade by Standard and Poors, and/or Moody's, Guidelines For Equity Investments To the extent the Funds holds equity securities, risk is to be measured in tenns of volatility relative to the S&P 500 Stock Index. The Trustees desire that the average volatility of the Fund's equity ponfolio should approximate being equal to that of the S&P.500, " " " . Page 4 ~.. :'. r; INVESTlVIENT COJ.\tIl\HTIEE ! An Investment Committee shall be created to monitor performance and investment results as well as oversee the implementation of the Investment Policy Statement. This Investment Corrnnittee shall consist of the following members: Mayor, Mayor-Pro Tern. Chairman Finance Committee, Administrator, and Comptroller. The Comptroller is appointed as agent of the Investment Connnittee and authorized to take any administrative action necessary in support of this Investment Policy Statement. INVESTMENT MA1'IAGER PERFORMANCE REVIEW AND EV ALVATION Performance reports generated by the Investment COI).Sultant shall be compiled at least quarterly and connnunicated to the Trustees for review. The investment performance of total portfolios, as well as asset class components, will be measured against coinmonly accepted performance benchmarks, Investment managers shall be reviewed quarterly regarding perfonnance, personnel strategy, research capabilities, organizational and business matters, and other qualitative factors that may impact their ability to achieve the desired investment results. All internal controls, investment procedures, records, reports, and documentation shall be reviewed annually by an independent auditor. INVESTI\1ENT POLICY REVIEW To assure continued relevance of the guidelines, objectives, financial status and capital markets expectations as established in this statement of investment policy, the Trustees plans to review investment policy at least annually. This statement of investment policy is adopted by the Connnissioners of Augusta, Georgia, and is meant to supersede all previously adopted Investment Policy Statements for the Pension Funds, day of 0_ 4.<11." . 199/ / . C1W cr DATE: .~~~/ Att stor's sf 'C1ture Lena J. Bonner Attestor's typed name Clerk of Commission Title of attestor Page 5 \ 'l <;; /' ." .4 TO: FROM: DATE: SUBJECT: CAPTION: BACKGROUND: ANAL YSIS: APPROVED . $EP 0 2 1997 AGENDA ITEM (AUGUSTAiRitHMOND COUNTY COMMISSION) HONORABLE LARRY E. SCONYERS MEMBERS OF FINANCE COMMITTEE CHARLES R, OLIVER, ADMINISTRATOR AUGUST 5, 1997 STATEMENT OF INVESTMENT POLICY OBJECTIVES & GUIDELINES Approve Statement of Investment Policy Objectives &. Guidelines to make investment policy consistent between plans, The former City of Augusta sponsored the 1949 Pension Fund and the former Richmond County Board of Commissioners sponsored the 1945 and 1977 Pension Funds, which provided pension benefits to qualified participants and their beneficiaries. " The purpose of the Statement of Investment Policy Objectives and Guidelines is to outline a philosophy and attitude which will guide the investment management of the assets toward the desired results. It is intended to be sufficiently specific to be meaningful, yet. flexible enough to be practical. The Statement of Investment Policy Objectives and Guidelines will incorporate general investment principles, . delegation of authority, investment objectives, marketability of assets, investment guidelines and other factors into a cohesive policy for the management of Augusta-Richmond County's Pension Funds. An Investment Committee shall be created to monitor performance and investment results as well as oversee the implementation of the Investment Policy Statement, The Investment Committee shall consist of the following members: Mayor, Mayor Pro-Tern, Chairman of the Finance Committee, Administrator and Comptroller, The Comptroller shall be appointed as agent of the Investment Committee a'nd shall be authorized to take any administrative action necessary in support of the Investment Policy Statement. ! . ~ -, .' " <- . AGENDA ITEM PAGE TWO ANALYSIS: (CONT.) It should be noted this policy delegates to the Investment Committee (Mayor, Mayor Pro-Tern, Finance Chairman, A~!T1inistrator and Comptroller) the authority to select, retain or terminate professional investment manager(sl. FINANCIAL IMPACT: None. ALTERNATIVES: Continue with current policies regarding Pension Funds. RECOMMENDATION: We believe it to be in the best interest of Augusta- Richmond County's Pension Funds to have a cohesive policy to guide the investment management of these assets toward the desired results. DEPARTMENT DIRECTOR: COUNTY .. ADMINISTRATOR: C1.'\~ f<,,~ '6/~1 FINANCE: COMMllTEE ACTION: