ENDOWMENT FUND MANAGEMENT

RESPONSIBLE INVESTING NOW AND INTO THE FUTURE.

INVESTMENT COMMITTEE

The Endowment Fund is managed by the Investment Committee (IC), a subcommittee of the Board of Trustees. The IC consists of three Foundation Trustees that appoint an external Investment Manager, with investment expertise.

 

The IC meets regularly to review asset allocation policies, Endowment performance and strategies proposed by the external Investment Manager. The Committee approves guidelines for investment of the Endowment portfolio, specifying investment objectives, spending policy and approaches for the investment of each asset category. The Investment Committee brings discipline to the endowment
management process via formal adoption of a Statement of Investment Policy (SIP).

INVESTMENT POLICY

All endowment funds, irrespective of restrictions places on spending, are commingled for investment purposes; and tracked with unit accounting, much like a mutual fund. Endowment gifts of cash, securities or property are valued and exchanged for units that represent a claim on a portion of the total investment portfolio.

On 30 March 2020, the Foundation entered into a Discretionary Investment Management Service Agreement with Jarden Securities Limited (Jarden). The Agreement grants Jarden the authority to manage the Foundation Endowment Portfolio on a discretionary basis, subject to the SIP which sets out the Foundations long term investment objectives.

The Foundation has approved a strategy that encompasses a diversified multi-asset class portfolio with the objective to preserve and grow the Foundation’s capital in real (inflation-adjusted) terms and to generate income commensurate with the Investment Committee’s requirements. The Foundation has targeted a real return rate (after all investment expenses and inflation) from the portfolio of 4%, recognizing that the targeted rate of return is a long term one and will not be achieved in every measurement period. The current Strategic Asset Allocation recommended by the Investment Manager and accepted by the Investment Committee, is categorized as a balanced/conservative strategy under the Jarden framework.

INVESTMENT KEY CONSIDERATIONS

The Investment Policy is based on the following key considerations:

  • The Foundation expects to exist in perpetuity. Accordingly, it has chosen to adopt a long-term investment horizon.

  • The Foundation seeks, where possible, to minimise volatility or risk. Notwithstanding this, the Foundation acknowledges that investing solely in capital stable investments exposes the Foundation’s asset base to the risk of inflation and is willing to accept some risk in order to increase its expected return.

  • The Foundation’s strategy is to see capital growth over time with some income, accepting that moderate risk is attached to that strategy.

The Investment Committee will periodically review its SIP when circumstances arise where the Committee consider a change is prudent.

SPENDING POLICY

The spending rule is a key fiscal discipline for an endowed institution. Spending policies seek to balance the institution’s conflicting goals of providing support for current operations and preserving purchasing power of endowed assets.

The Foundation currently targets an annual endowment payout rate of 3-5% of the market value of the endowed assets in each year. The spending policy combines a long-term spending rate target with a smoothing rule, which adjusts spending in any given year gradually in response to changes in Endowment market value. The actual payout rate may fluctuate slightly depending on the performance results of investment assets, but the intention is to provide as steady an income stream as possible, so the school is able to plan for its needs. Adjustments may be made to the payout mechanisms over time, always with the goal in mind to balance budget stability with the preservation of the Endowment’s purchasing power.

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Endowment Prospectus

Learn more about how you can make a difference to the future of Wakatipu High School.

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If you have any questions or would like to discuss how you can support WHS through the WHS Foundation then please contact us.