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Treasury Portfolio Management (Aust.)

Parent Policy

Treasury Management

To manage the day to day liquidity of Monash University and such other approved funds 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 Treasury Portfolio
Agreement: Investment Management Agreement between Monash University and the appointed Fund Manager
Custodian: The body that holds all investments made by the Fund Manager on behalf of Monash University

Investment Objective

To consistently provide returns (after transaction costs) in excess of the UBS Warburg Australia Bank Bill Index over rolling twelve month periods.

Responsibility

Treasurer

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 to confer with Monash University
  • to keep proper books of account in relation to the portfolio and to assist Monash University or the Custodian in the preparation of reports required under the relevant Law as instructed buy the Client. 

Responsibility

Treasurer

Limitations of the Manager

Unless with the prior written consent of an authorised officer/officers of Monash University, the Manager shall not:

  • Enter into derivative contracts (including without limiting the generality of that expression, swap agreements, futures contracts, options and any form of agreement creating a contingent liability) unless there are at all times sufficient assets in the Portfolio to support the underlying liability of every contract in the form of one or more of the following:
    - assets of a kind required to be delivered under the contract, or
    - other contracts or assets which substantially offset the underlying liability under the contract, or
    - cash or immediately realisable assets of sufficient value either to discharge the maximum contingent liability or effect on offset as described above.
  • delegate any of its discretionary powers.
  • charge or encumber in any way (other than as arises by lien in the ordinary course of business or by statutory charge) any asset in the portfolio.
  • perform any broking function, but the Manager may on behalf of Monash University, appoint any broker to act on behalf of Monash University in conjunction with the Manager.
  • Engage in securities lending in relation to the portfolio

Responsibility

Treasurer

Credit Risk Management

  • any investment undertaken must have an acceptable credit rating provided by Standard & Poor's Australian Ratings and/or its Moody's equivalent.
  • The minimum credit rating of any investment shall be A2 (short term) and A- (long term).
  • The amount of funds that can be invested in any individual investment is limited to the following;

Investment Grade

Maximum Investment Level

Short Term:

A2

$10,000,000

A1

$25,000,000

A1+

$50,000,000

Long Term:

A- to A+

$  5,000,000

AA- to AA+

$15,000,000

AAA

$35,000,000
  • The combined value of investments in Investment Grade A2 (short term) and A- to A+ (long term) is restricted to no more than 50% of the total value of portfolio investments.
  • The maximum term to maturity of any investment shall be 5 years. The maximum term to maturity of the total portfolio shall be 1 year. The maximum reset date for floating rate notes shall be 1 year.

Responsibility

Treasurer

Benchmark

The returns of the portfolio will be compared with the returns to the benchmark, which will be the UBS Warburg Australia Bank Bill Index.

Responsibility

Treasurer

Types of Investment Permitted

Given the minimum credit rating standards detailed above the following types of investment will be acceptable:

  • Deposits with (including certificates of deposit of) an authorised deposit-taking institution (within the meaning of the Banking Act 1959), (as amended), or a money market corporation registered under the Financial Corporations Act 1974
  • securities of, or guaranteed by, the Commonwealth, or a State or Territory of the Commonwealth
  • bills of exchange accepted or endorsed by a Bank
  • promissory notes and/or commercial paper
  • floating rate investments
  • Derivatives Contracts
  • Units in unit trusts or pooled funds which invest predominantly in investments referred to above, including unit trusts of which the manager is the manager.

Responsibility

Treasurer

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