 | Board of Visitors minutes October 9, 1992 |  |
INVESTMENT GUIDELINES FOR THE
CURRENT FUNDS PORTFOLIO
Earnings from Current Funds' investments provide an important source of unrestricted revenue for the University. Funding for this program includes cash balances in the loan, endowment, plant and University restricted and unrestricted current funds beyond those required to meet the daily cash needs of the University.
Investment Objectives
The primary investment objective of the fund is to maximize investment income consistent with the need for safety of principal and liquidity. A secondary objective is to realize incremental income or principal appreciation, consistent with the primary objective, through active management of the portfolio. A target total return for the portfolio is to generate a return in excess of a composite index consisting of 60 percent of the 91-Day T-Bill index and 40 percent of the Merrill Lynch 1-3 year government/treasury index over rolling one-year periods.
Investment Philosophy
Portfolio management and trading will be used to achieve the objectives. Strict quality standards have been established to minimize credit risk. In order to protect against or capitalize on sharp fluctuations in interest rates, trading may be substantial at times. Although there are no maturity restrictions, emphasis will be placed on short-term, highly marketable securities to insure adequate liquidity.
Investment Policies
1. No maturity restrictions.
2. The funds may be invested in the following instruments:
a. Savings accounts approved for Commonwealth of Virginia deposits.
b. Repurchase agreements, collateralized by U.S. treasury or agency securities.
c. Certificates of Deposit and Bank Deposit Notes issued by any of the following Virginia banks:
NationsBank of Virginia, N.A.
Jefferson National Bank
Crestar Bank
Central Fidelity Bank
Signet Bank
Dominion Bank, N.A. or any Virginia bank rated A, A/B, or B by Keefe, Bruyette & Woods Bank Watch Bank/Thrift Ratings. No more than 10% of the portfolio shall be invested in CD's issued by any single bank.
d. Commercial paper issued by domestic corporations having a credit rating of A1 by Standard and Poor's and P1 by Moody's. Dollar denominated commercial paper issued by foreign issuers with a rating of A1 by Standard and Poor's and P1 by Moody's. No more than 10% of the portfolio shall be invested in the commercial paper of any single issuer.
e. U.S. Treasury Notes and Bonds
f. Obligations of any agency or instrumentality of the United States to include:
1. Federal Home Loan Bank
2. Federal Farm Credit Bank
3. Federal National Mortgage Corporation
4. Government National Mortgage Association
5. Federal Home Loan Mortgage Association
6. Student Loan Marketing Association
7. Tennessee Valley Authority
8. World Bank
9. Mortgage-Backed Securities issued by either FHLMC or FNMA provided the duration and liquidity are consistent with portfolio objectives.
Each agency will be limited to 10% of the portfolio.
g. Corporate notes and bonds rated A or better by S&P or Moody's.
h. Bankers' Acceptances issued by any domestic bank rated B/C or better by Keefe, Bruyette & Woods. Bankers' Acceptances issued by international banks with a bank rating of B/C or better and a country rating of I.
i. Fully hedged obligations of sovereign governments with an Aaa rating by Moody's
j. Short-term money market funds to include:
Fiduciary Trust Company International
Franklin Money Fund
Dreyfus Money Market
Delaware Cash Reserves, Inc.
Common Fund for Short Term Investments or any other money market fund, which invests exclusively in securities approved for current funds investments.
k. Common Fund for Bond Investments
l. Common Fund Intermediate Cash Fund
m. Municipal bonds, either general obligation or revenue, rated AA or better.
n. Subject to the approval of the Senior Vice President and Chief Financial Officer internal loans to University Departments and Activities to be repaid from operating and capital funds budgeted for this purpose. No more than a total of $10 million shall be invested in internal loans at any one time.
Custody
All securities will remain in the custody of the University of Virginia or its custodian bank.
| Board of Visitors minutes October 9, 1992 | |