Balanced Fund Portfolio Management (Aust.)
Parent Policy
Treasury Management
To manage the long term surplus funds of the University so as to provide an ongoing income stream above that which may normally be expected, while maintaining the capital value of the portfolio through minimising the risk associated with the types of investment undertaken and the strategies adopted.
Definition of terms
Portfolio: All investments held under the title of Monash University Balanced Fund
Agreement: Investment Management Agreement between Monash University and the appointed Fund Manager
Duties of the Manager
- To invest and manage the portfolio for and on behalf of Monash University in accordance with the Agreement.
- To keep the portfolio under review and confer at regular intervals with Monash University regarding the investment and management of the portfolio.
- To keep proper books of account in relation to the portfolio, recording transactions in accordance with generally accepted accounting principles.
- Provide access to and a copy of the accounts and records relating to the portfolio whenever reasonably requested by Monash University or to a person duly authorised by Monash University.
Responsibility
Treasurer
Specialist Manager Structure
The manager must ensure that the investment mandates for each specialist manager are set and maintained, that it monitors the performance of each specialist manager and reviews each manager's processes and internal controls. Monitor the ongoing appropriateness of specialist managers to act in managing the portfolio, and, at its discretion, make changes as and when necessary based on detailed research of investment managers to ensure ongoing consistency with the underlying investment objectives of the portfolio.
Responsibility
Treasurer
Investment Objective
The objectives to apply to the portfolio shall be:
- The net return of the portfolio exceeds CPI + 3% pa over rolling 10 year periods:
- The chance of a negative real return is limited to one year in every three years, on average
- That the market value of the portfolio will not fall below $110 million in any one year over the next ten years.
Responsibility
Treasurer
Strategic Asset Allocation and Tactical Ranges
The Manager may invest the portfolio within benchmark asset allocations and tactical ranges approved by Monash University and stated in the Investment management Agreement. The benchmark allocations are currently;
- Australian Equities: 33.5%
- International Equities (Hedged) 19.0%
- International Equities (Unhedged) 19.0%
- Property Trusts 3.5%
- Australian Fixed Interest 7.0%
- Inflation-Linked Securities 6.0%
- International Fixed Interest 12.0%
- Liquidity 0.0%
Responsibility
Treasurer
Sector Benchmarks
Unless otherwise agreed the Manager will use the benchmark indices stated in the Investment Management Agreement for measuring performance.Responsibility
Treasurer
Allowable Investments
The manager is permitted to invest the portfolio in investment trusts that comply with the mandate prescribed in the Investment Management Agreement. Where the Manager wishes to invest funds outside the investment trusts permitted under the Agreement, the following requirements should be adhered to:
- Liquidity: to be invested in securities being either bank bills or semi-government discount securities rated A1 + or better, with a maximum term to maturity of 195 days, and/or call deposits with a Bank.
- Fixed Interest: for Australian Fixed Interest the weighted average duration is limited to 5.5 years with the exposure to Commonwealth Bonds and Semi-Government securities of AAA rating to be no less than 50% of the sector. No individual security can be more than 25% of the sector.
- For International Fixed Interest only sovereign debt securities may be purchased.
- Equities: for Australian Equities the portfolio must maintain an exposure to the top 100 largest listed companies of no less than 80% of the sector, with no more than 55 equity investments to be held. The maximum exposure to any one individual equity investment to be no more than 10% of the sector by market value.
- For international equities the maximum exposure to any individual investment is 5% with the total number of equity investments in this sector limited to 96.
- Derivative Products: further to Limitations of the Manager the portfolio may hold bought or sold futures contracts and options thereon sourced from a financial instrument and exchanged traded options contracts provided that:
- the portfolio has cash or short term securities to meet any short term liability arising
- the portfolio does not become leveraged due to market fluctuations
- the relevant contract is traded on a recognised exchange
- the underlying value of any contracts when added to the market value of securities in that asset sector does not breach the asset allocation range detailed above.
Responsibility
Treasurer
Content Enquiries: Finance Policy
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