STATEMENT OF INVESTMENT POLICY
This paper sets out the current investment policy of Quartet Community Foundation in accordance with good practice recommended by the Charity Commission. It is subject to regular review.
2. The Needs of the Charity and its Beneficiaries
Central to Quartet Community Foundation's mission is the development of an endowment fund, providing sustainable support for local communities in the long term. Quartet Community Foundation aims to achieve a balance between meeting current needs and developing the endowment to meet the needs of future generations.
3. Investment of Donations
As long as a reasonable rate of return can be obtained, funds derived from revenue donations for grants and staffing/support costs are retained in bank accounts to meet current needs.
Donations to the endowment fund are held in a bank account until a quarterly fund entry date (1 January, 1 April, 1 July and 1 October). The money is then transferred to Quartet Community Foundation's Investment Managers for investment.
4. Powers of Investment
Under Clause 4.1(l) of Quartet Community Foundation's Memorandum of Association, the Trustees have wide powers to apply or invest Quartet Community Foundation's monies as they shall in their absolute discretion think fit.
The Charity Commission has made a Scheme (17 October 2000) to widen the investment powers relating to the permanent endowment, in order to allow a more flexible approach to the allocation of capital and income returns.
5. Investment objective
Following the agreement of the Charity Commission, Quartet Community Foundation moved to a total return approach on its investment portfolio. The objective is to achieve a total return at a level equal to or above inflation plus 4% pa using a moderate risk investment strategy, and with a long-term horizon of at least 5 years.
6. Investment Approach and Strategic Asset Allocation
The investment objective is to be achieved by investing prudently and cautiously in a broad range of fixed interest securities, UK and overseas equities and other investment classes. The desired investment profile may be achieved through investment in collective investment vehicles that themselves invest in these asset classes. The current strategic asset allocation ranges are as follows.
Alternative asset classes
There is a maximum investment in any individual holding of 5% of the value of the fund.
Cash deposits forming part of the endowment fund are held in deposit and money market accounts.
7. Investment criteria
The fund is not to invest in tobacco companies.
Otherwise, the extent to which social, environmental or ethical considerations are taken into account in decisions that may affect the value of the fund is left to the discretion of the Investment Managers. The Trustees' policy is to delegate responsibility for the exercising of rights (including voting rights) attaching to investments to the Investment Manager.
8. Investment Managers
At their meeting in March 2012, Trustees approved the decision to appoint Smith & Williamson Investment Management Limited (a part of the Smith & Williamson group and authorised and regulated by the Financial Services Authority) to manage their investment portfolio (other than the directly owned property investments). Smith & Williamson are delegated discretionary powers of investment, as detailed in the investment management agreement between the Trustees and Smith & Williamson. This includes the power to adopt an asset allocation profile within the limits of the ranges shown in section 6 above.
The Trustees will review the Investment Manager's appointment in three years and subsequently at such intervals not exceeding 24 months as they think fit.
Smith & Williamson will report to the Trustees as follows:
· a quarterly portfolio valuation and analysis of performance
· quarterly meetings with the investment manager as required by the Trustees
· regular contact between Smith & Williamson and the Foundation's Chief Executive and/or Finance Officer.
9. Investment performance
Performance of the investment portfolio will be monitored against the investment objective and also against other appropriate benchmarks.
Quartet Community Foundation's endowment fund also currently includes two directly owned properties (Royal Oak House, Bristol and the Badger Centre, Weston-super-Mare). The properties are independently re-valued annually.
Finance/Investment policy summary/Investment rev March 2012