HomeMy WebLinkAboutStatement Of Investment Policy Objectives And Guidelines
Augusta Richmond GA
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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).
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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,
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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.
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INVESTMENT COMMITTEE
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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.
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INVESTMENT MANAGER PERFORMANCE REVIEW AND E"
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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
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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
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Lena J. Bonner
Attestor's typed name
Clerk of Commission
Title of attestor
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'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
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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
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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:
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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~
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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).
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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.
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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.
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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, " "
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INVESTlVIENT COJ.\tIl\HTIEE
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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/
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C1W
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DATE:
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Att stor's sf 'C1ture
Lena J. Bonner
Attestor's typed name
Clerk of Commission
Title of attestor
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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.
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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: