Handbook of the Society of California Archivists

Handbook, Bylaws, and Policies

  1. SCA Handbook / Part 3 Committees / 3-9-1 SCA Investment Policy Statement

3-9-1 SCA Investment Policy Statement

Purpose

This Investment Policy Statement outlines the objectives, guidelines, performance expectations, and administrative expectations for the management of assets for the Society of California Archivists (SCA). These objectives have been established to provide the SCA Board of Directors with a meaningful framework for evaluating SCA’s portfolio management in order to meet their fiduciary responsibility to prudently monitor SCA’s investments. It is the intent of this Policy Statement to express general guidelines, attitudes and a philosophy aimed to guide members of the Finance and Investment Committee and other investment advisors. It is also intended that the policy be sufficiently specific to be meaningful, but flexible enough to be practical.

Procedures

The following procedures will be followed to ensure the Investment Policy Statement is consistent with the current mission of SCA and adequately reflects the current financial condition of SCA. It is understood that this policy has been approved and adopted by the SCA Board of Directors.

  1. The Board of Directors shall review the policy during the second year of each Treasurer’s term (biennially) and inform the Finance and Investment Committee of any changes in SCA’s strategic aims that may require alterations in SCA’s investment plans. This review cycle will begin in 2017.
  2. Complete investment guidelines, including acceptable investments, risk exposure limits, comparison benchmarks, and reporting expectations will be established and outlined in this document.
  3. An investment advisor may be periodically retained to assist the Finance and Investment Committee in managing assets covered by this policy. The Finance and Investment Committee will interview and recommend hiring to the SCA Board of Directors. The Board of Directors will approve the recommendation.

Responsibilities of the Finance and Investment Committee

The Finance and Investment Committee recognizes that the SCA Board of Directors maintains fiduciary responsibility for the organization, and that their own role is advisory in terms of investment strategy and policy. The Finance and Investment Committee responsibilities are outlined in the SCA Handbook, section 3-7.

The specific responsibilities of the Finance and Investment Committee in the investment process include and are limited to:

  1. Communicating the Board’s projected financial needs to an investment advisor;
  2. Participating in developing and monitoring sound and consistent long-term investment policy guidelines;
  3. Establishing reasonable investment objectives;
  4. Monitoring and evaluating performance results to assure that policy guidelines are being adhered to and that those objectives are being met;
  5. Ongoing monitoring of the Investment Policy Statement to assure its consistency and relevance with the current activities and financial condition of SCA;
  6. Advising on the fiscal impact of the Society’s current programs, and those that are planned for the future.

Investment Guidelines

Investment objectives, risk levels, and general guidelines are described in this document. It is understood that the Board of Directors is responsible for the implementation of, and adherence to, the policies and objectives set forth in this document.

A. Measured Period: For purposes of measuring a rate of return over a market cycle, the measured period shall be between three and five years.

B. Fiduciary Standards: Investment of the long term portfolio shall be prudently diversified in terms of asset classes and broad market sectors. The Society’s assets are to be invested and managed in accordance with generally accepted standard of fiduciary responsibility. The safeguards which would guide a prudent investment manager are to be strictly observed. All transactions utilizing assets are to be undertaken for the sole benefit of SCA.

C. Volatility of Return: The goal of SCA’s long term investments is to produce returns that exceed inflation by 5% per year with an acceptable level of risk. The SCA Board of Directors understands that the current long-term portfolio asset allocation has a high probability of depreciating in any single year. Given that the overall portfolio has a long-term horizon, a prudent amount of short-term risk is acceptable to the SCA Board of Directors.

D. Permissible Investments: The Society’s assets may be invested only in publicly-traded common and preferred stocks, convertible bonds, and fixed-income securities, whether interest-bearing or purchased at discount, including money-market instruments, subject to any restrictions hereinafter specified. This investment can be in the form of direct investment in the stock market, or indirect investment via mutual funds. No other securities or instruments shall be presumed to be permissible investments without an amendment to this Policy.

E. Equity Portfolio Characteristics: The Society’s assets invested in equity securities shall, as a group:

  1. Have a volatility, or risk level measured as beta, not exceeding that of the overall stock market as measured by the S&P 500 Index;
  2. Be sufficiently diversified so as to moderate risk, but not so excessive as to preclude attainment of optimal results.

F. Fixed Income Portfolio Characteristics: The Society’s assets invested in fixed income securities shall, as a group:

  1. Have a weighted average maturity as measured by their market value between 2 and 10 years;
  2. Have a maximum maturity of any individual issue of not more than 20 years;
  3. Have an average portfolio quality as measured by market value of “A” or better as rated by Standard and Poors;
  4. Have no fixed income security rated at less than “B” grade by Standard and Poors;

G. Foreign Securities: Investment in any securities whose issuer is a foreign corporation, government, or government entity shall be limited to no more than 10% of the total managed portfolio. Foreign equity investments shall include only those securities traded on principal U.S. stock exchanges.

H. Asset Diversification: The Society’s investments will maintain a reasonable diversification at all times. No more than 5% of the Society’s assets will be invested in a single company. No more than 15% of the entire portfolio may be invested in the securities of any one sector.

I. Investments and Transactions Which Are Not Permitted:

  1. Commodities and Futures Contacts
  2. Private Placements
  3. Options
  4. Limited Partnerships
  5. Venture-Capital Investments

Investment Allocations

Investment Objective & Risk Profile: Current income with a defensive bias.

Investment Objectives:

  1. Preservation of Capital
  2. Moderate growth offering liquidity with limited risk exposure
  3. Optimize investment return within constraints of the policy
Overall Allocation Minimum Target Maximum
Fixed Income 50% 70% 90%
Equities 0% 20% 40%
Cash & Equivalents $20,000 10% 20%
Operating Reserves n/a n/a n/a

Benchmark: TBD

Acknowledgment: The Finance and Investment Committee of the Society of California Archivists drew heavily from the 2015 draft of the Midwest Archives Conference Investment Policy Statement for this document.

Revision history: 01/2017 llc, 04/2019

  1. Section 3-9-1 SCA Investment Policy Statement
  2. Part 3 Committees
  3. Handbook of the Society of California Archivists