 | Board of Visitors minutes June 5, 1981 |  |
ATTACHMENT A
Investment Guidelines for the
University of Virginia's
Eminent Scholars Fund
Investment Objective
The primary investment objective of the fund is to earn a current return (interest or dividend) which meets current spending requirements for endowed chairs including matching fund participation by the State of Virginia in the Eminent Scholars Program. The current return requirement is presently 6-7% of market value of the fund. A secondary objective is to provide growth in income equal to one-half the annual rate of inflation as measured by the Higher Education Price Index.
Investment Philosophy
Investments should be made from a stable, long-term perspective with moderate turnover. Extreme positions or very opportunistic styles should be avoided. The fund need not be fully diversified by asset class and equity sectors as is the case with Consolidated Endowment. In keeping with this, and to ensure maximum investment flexibility subject to the current income requirement, single rather than multiple management is preferred. The fund will be monitored on a continual basis, with the focus on current income and growth in income rather than total return, but results will be evaluated on a long-term basis.
Investment Policies
1. Asset mix (the ratio of stocks, bonds, and money market instruments) is left to the discretion of the manager, given the constraint that equities plus equity reserves shall equal a minimum of 65%.
2. Strategies which would result in more than 20% of equity assets committed to securities rated B or lower or bonds below the top three quality ratings should be reviewed in advance with the Finance Committee.
3. Strategies which would result in more than 20% of equity assets committed to companies with less than $200mm in market capitalization should be reviewed in advance with the Finance Committee.
4. Heavy concentration of equity or bond assets in only a few industries (telephones and electrical utilities excepted for bonds) should be avoided. Although full diversification of the fund is not required or desired, diversification should be sufficient to meet fiduciary standards and should be monitored by the Vice President for Business and Finance and his staff.
5. Strategies which would result in annual equity turnover in excess of 25% or bond turnover in excess of 50% should be reviewed in advance with the Finance Committee.
6. Foreign securities (except listed ADR's and Canadians), security options, private placements, equity real estate (except through associated ventures), direct mortgages, and venture capital interests are not to be purchased or sold by the fund.
| Board of Visitors minutes June 5, 1981 | |