Investment Policy

1.		Preamble
	1.1	The University’s general investment strategy will be to optimise income earned whilst minimising capital risk, having regard to the University’s cash flow requirements.
	1.2	Funds available for investment will fall into one of the following categories: • Long Term Pool • Short Term Pool • Strategic investments as determined by Council, e.g. investments in subsidiaries, associated entities, property
	1.3	This policy covers the operation of the Long Term and Short Term investment pools. In the operation of its investments, the University will exercise the care, diligence and skill that a ‘prudent person’ would exercise in managing the affairs of other persons.
	1.4	All investments will be in the name of ‘The Flinders University’.
2.		Long Term Pool
	2.1	Council, on the recommendation of Resources Committee, will determine the quantum of funds to be invested in the Long Term Pool. The allocation of funds in the Long Term Pool amongst investment managers must be approved by the Resources Committee, on the advice of the Investment Sub-Committee.
	2.2	The University will appoint professional investment managers to manage the University’s long term investment pool. All such appointments and termination of appointments will be made by the Resources Committee, on the advice of the Investment Sub-Committee.
	2.3	The investment managers will have full responsibility for the investment of the funds, within agreed mandates
	2.4	The investment managers will be required to comply with prudent standards of judgement, as would be compatible with the skill and expertise of a professional in the business of portfolio management.
	2.5	The investment managers will be permitted to use derivative instruments such as futures and options to assist with the effective management of the investments. Derivatives may not be used to gear the portfolio. The use of derivatives must be in accordance with the investment manager’s Risk Management Policy, which is to be submitted and approved by the Resources Committee.
	2.6	Unless otherwise approved by the Resources Committee, an investment manager will be restricted to: • investing no more than 10% of their portfolio in any one security or asset • investing no more than 5% of the issued capital of any one company
	2.7	For bequests and donations that have a time horizon of greater than five years, assets may be invested in the Long Term Pool, provided investing in the Long Term Pool is consistent with the purpose of the bequest or donation and any rules attached thereto.
	2.8	The investments of the Long Term Pool will be managed to provide long term growth whilst reducing risk through diversification, within limits as to the type of investments set by this policy.
	2.9	The primary performance objective of the Long Term pool is to achieve a rate of return of at least “Inflation plus 5% pa over rolling five-year periods (after fees)”. Inflation will be measured by the Consumer Price Index (‘CPI’).
	2.10	A secondary performance objective is to out-perform the return of the benchmark portfolio over rolling five year periods.
	2.11	The risk objective of the Long Term Pool is to achieve positive investment returns in at least four out of every five years.
	2.12	The following table sets out the benchmark portfolio against which performance will be measured, and the asset allocation guidelines against which the Long Term Pool is expected to operate. The Resources Committee, on the advice of the Investment Sub-Committee, will determine actual asset allocations consistent with these guidelines.

	Minimum	Benchmark	Maximum
Australian shares	40%	70%	80%
Total Growth Assets	40%	70%	80%
Fixed interest	0%	30%	40%
Cash	0%	0%	20%
Total income Assets	20%	30%	60%
TOTAL		100%

3.		Short Term Pool
	3.1	University funds not allocated to the Long Term Pool and strategic investments, will be invested in the Short Term Pool.
	3.2	Investments in the Short Term Pool will comprise of bank bills, deposits with a bank or term deposits with a maturity horizon of no more than one year. Investments can also be made in cash or cash enhanced trusts provided that the average maturity of underlying investments is no more than one year.
	3.3	Risk will be managed through the following requirements: no more than 60% of the total Short Term Pool will be held with a single financial institution investments will only be made with financial institutions with a Standard and Poor's (or equivalent) credit rating of at least A. investments will only be made with financial institutions regulated by Australian Prudential Regulatory Authority (APRA) or the South Australian Government Financing Authority.
	3.4	The performance objective of the Short Term pool will be to achieve a rate of return of at least the cash benchmark return over rolling one year periods (after fees). The cash benchmark return will be measured by the UBSA Bank Bill index.
	3.5	Investments will be made following the invitation of rates from the University’s banker and at least one other competitor, seeking the most favourable interest rate, term and the level of security.
	3.6	A register of investments in the Short Term Pool will be maintained and include the following: Name of investment; Date acquired; Amount of investment; Maturing date; Term; Interest rate.
	3.7	The investment register will be reconciled to the general ledger on a quarterly basis by the Senior Accountant (or nominee). The register and the reconciliation will be reviewed by the Director Financial Services.
4.		Performance Monitoring and Reporting
	4.1	The performance of the Short Term and Long Term investment pools will be monitored separately on a quarterly basis, with an annual evaluation of rolling one, three and five-year results.
	4.2	The principal goals in monitoring each investment pool’s performance will be to determine: The performance of each investment manager against relevant benchmarks; and the performance of each investment pool as a whole against its objective/s.
	4.3	The benchmarks used to assess performance will be the following: Australian shares: S&P/ASX300 Accumulation index Fixed interest: UBSA Composite Bond index (All maturities) Cash: UBSA Bank Bill index
	4.4	If an investment manager fails to achieve the objectives set, their appointment will be reviewed by the Investment Sub-Committee, which may recommend that the Resources Committee authorise the termination of their appointment.
	4.5	Interviews will be conducted by the Investment Sub-Committee with each appointed investment manager from time to time, normally at least annually.
	4.6	A schedule of investments and investment performance will be submitted to the Resource Committee meetings following 30 June and 31 December each year.
5.		Responsible Officer
	5.1	The Director, Financial Services (or nominee) is authorised to invest University funds in accordance with these policies and procedures.
	5.2	Where the Director Financial Services sub-authorises the authority to invest funds, this must be done in writing and include any specific limitations.