The Canadian Women’s Foundation is Canada’s first and only national public foundation dedicated to investing in the lives of women and girls through social and economic change. The Canadian Women’s Foundation raises funds and makes grants to charitable projects in Canada that move women and girls out of violence, out of poverty, and into confidence and leadership.
1. PURPOSE OF INVESTMENT GUIDELINES
The Investment Guidelines set out the authorities and responsibilities for the investment of restricted and unrestricted funds of the Canadian Women’s Foundation. This Investment Policy is in accordance with the Trustee Act (1990) and any subsequent provisions (noted where appropriate)
2. RESPONSIBILITIES OF THE INVESTMENT COMMITTEE AND THE BOARD OF DIRECTORS
- The Investment Committee will act in an advisory capacity to the Board of Directors, which has the responsibility to monitor the performance of the Investment Manager(s).
- The Investment Committee will assist the Board of Directors in developing an Investment Policy and investment guidelines annually and propose recommended changes required, for approval by the Board of Directors.
3. INVESTMENT OBJECTIVES
The basic investment objectives are to ensure that funds will be invested in a prudent and effective manner and shall be sufficient to support cash flow requirements as they arise.
The expected required rate of return over a three-year rolling period for the portfolio is 4% to 6% in order to cover the Canadian Women’s Foundation income requirements and to protect the value of the portfolio against inflation. The expected rate of return incorporates the income requirement and inflation protection as determined through the Canadian Women’s Foundation Capital Preservation Policy.
The funds held by the Canadian Women’s Foundation are classified as either Short-Term Portfolio or Long-Term Portfolio.
(See Appendix I for description)
Primary investment objectives for Short-Term Portfolio are:
- to preserve capital
- to maintain liquidity necessary to meet cash requirements
- to optimize the rate of return, within the constraints of i and ii
Primary investment objectives for Long-Term Portfolio are:
- to preserve capital, in real terms
- to optimize the rate of return, within acceptable risk levels as set by the Board of Directors.
4. AUTHORIZED INVESTMENTS
The Canadian Women’s Foundation will invest in any form of property in which a prudent investor might invest.
(This complies with the Trustee Act Authorized Investments paragraph 27 point 2, revised 1998, c.18, Schedule .B, s 16(1)).
This policy contains separate asset allocation guidelines (authorized types of investments) for short-term portfolio and long-term portfolio. See Appendix II. It will be at the Investment Manager(s)’ discretion to determine the asset mix within these limits.
- Except for government bonds, not more than 10% of the total market value of the portfolio will be invested in securities of any one issuer.
- There will be no borrowing from any source to make investments.
- The investment manager may invest in pooled funds that may use derivatives, such as options, futures and forward contracts, for hedging purposes, to protect against losses from changes in interest rates and market indices; and for non-hedging purposes, as a substitute for direct investment. However, the pooled funds must hold enough assets or cash to cover its commitments under the derivatives. The pooled funds cannot use derivatives for speculative trading or to create a portfolio with excess leverage.
- Liquid assets are restricted to 10% of the net assets of each pooled fund.
6. SOCIALLY RESPONSIBLE INVESTING
We define Socially Responsible Investing as making no investments in companies which are inconsistent with the Canadian Women’s Foundation’s role and guiding principles (Appendix III). We request that our Investment Manager(s) follow these principles when suggesting possible investments, or investing the Canadian Women’s Foundation’s money in accordance with the Trustee Act.
7. PERFORMANCE TARGETS AND STANDARDS
Over a four-year moving average basis, the Investment Manager(s) should achieve the following objective:
- to exceed a passive benchmark return (before fees) on the components of the portfolio equal to (for the short-term portfolio) the DEX 30-Day T Bill Index, (for the long-term portfolio) DEX 30-Day T Bill Index, DEX Universe Bond Index, S&P/TSX Composite Index, Standard & Poor’s 500 Total Return Index and/or MSCI EAFE Index.
8. RESPONSIBILITIES OF THE INVESTMENT MANAGER(S)
- The Investment Manager(s) shall invest the funds of the Canadian Women’s Foundation within these specific written guidelines and in accordance with the Investment Objectives. In carrying out their duties and responsibilities, the Investment Manager(s) shall exercise such competence and skill as may be expected of a prudent, diligent Investment Manager in similar circumstances.
- The Investment Manager(s) shall prepare Reports, which shall contain, as a minimum:
- list of portfolio holdings and their cost vs. current market values
- list of transactions for the month.
- portfolio listing by security showing cost vs. market value
- income for the quarter and annualized asset mix
- quarterly and past 12-month total return calculations by asset class versus benchmarks (defined in point 7)
- economic and market commentary with forecasts for the next 12-month or other relevant period
In addition, investment manager(s) should have at least one formal meeting a year with the Investment Committee to review the portfolio performance and discuss strategy for the ensuing period, and make at least one presentation per year to the Board of Directors. Manager(s) will refer, on a timely basis, any contentious issue so that guidance may be sought from the Investment Committee.
- Investment Manager(s) must disclose any material interest in any investment or proposed transaction. All investment activities must be conducted in accordance with the Chartered Financial Analyst code of ethics, and the Conflict of Interest Policy as adopted by the Canadian Women’s Foundation’s Board of Directors.
- The Investment Manager is delegated the responsibility of exercising all voting rights with the intent of fulfilling the objectives and goals of the Canadian Women’s Foundation. The Manager shall maintain a record of how voting rights of securities in the portfolio were exercised.
- Asset class allocations may fluctuate over time due to market movements. The portfolio allocations should be reviewed at least quarterly by the Investment Manager(s), and rebalancing should be considered by the investment manager when the asset class allocations fall outside of the ranges established in Appendix II. To the extent that it is reasonable, cash inflows and outflows should be used to rebalance the long term strategic allocation of the Long Term Portfolio.
The Investment Committee shall provide as much notice as possible regarding cash requirements or additional funds available for investment. But as these may not always be known in advance, consideration of this factor will be taken into account in assessing investment performance.
9. REVIEW OF INVESTMENT MANAGER(S) SERVICES
It is the responsibility of the Board of Directors to monitor the performance of the Investment Manager(s) on an ongoing basis with input from the Investment Committee. Circumstances which could require a special review of an Investment Manager appointment include, but are not limited to:
- Changes in ownership, personnel, structure, investment philosophy, style or approach of the investment management firm, which might adversely affect the potential performance and/or risk level of the fund portfolio(s). It is expected that the Investment Manager(s) will routinely advise the Investment Committee of any significant changes within the firm.
- Unauthorized departure from the stated investment guidelines. (Note: If the Investment Manager(s’) believes the guidelines are no longer appropriate, the Investment Manager(s’) should make a recommendation for amending the policy.)
- Investment performance which over a reasonable period of time is less than the performance targets and standards as outlined in this policy.
10. FUND WITHDRAWALS
- Cash flow activity will be reported by the appropriate Canadian Women’s Foundation staff to the Investment Committee and Board of Directors on a quarterly basis. This information will enable the Investment Committee to prepare a notice to the Board of Directors of any anticipated significant change in expected investment income. This information is relevant when the Committee and Board are reviewing the expectations and outcomes of the Investment Manager(s) performance. Any change of expectation should be documented and included in Board minutes.
- The Investment Committee and the Board of Directors should be advised by the appropriate Canadian Women’s Foundation staff if an unscheduled fund withdrawal is required from the endowment fund (the portion of the fund under board discretion, not the 10 year gifts.) The Board of Directors is required to pass a motion allowing the funds to be withdrawn. Any such unanticipated withdrawal will potentially change the investment income expectation and becomes relevant in reviewing the expectations and outcomes of the Investment Manager(s) performance. Any change of expectation should be documented and included in Board minutes.
Short -term Portfolio can consist of
- i) Board related reserves which consist of 20% grants allocations set aside for approved grants
- ii) unrestricted operating reserve funds
iii) money designated for the Economic Development Collaborative Fund.
These funds may need to be accessed within a year to a year and a half.
Long-term Portfolio (Endowment Reserve) can consist of
i.) donor restricted funds – legally restricted 10-year gifts. The principal of these funds cannot be used within 10 years of receiving the funds. Income generated from these funds is immediately available for use.
- ii) Board restricted funds – bequests, memorial funds and other funds restricted by Board motion such as investment income and gifts that have completed 10 year restrictions. Their restriction by the Board is in keeping with the wish of the donors or families of the deceased. Income generated from these funds is immediately available for use.
These funds are intended to be invested for perpetuity, with the income generated to be available to be used for the operations of the Canadian Women’s Foundation.
|Asset Class||Strategic Target||Range||Benchmark||Minimum Rating||Authorized Investments|
|Cash and Cash Equivalents||100%||N/A||DEX 30 Day T-Bill Index||R1-low||Deposit receipts, deposit notes, certificates of deposit, bankers acceptances, guaranteed investment certificates, commercial paper and other similar instruments issued or endorsed by any chartered Bank to which the Bank Act (Canada) applies, Treasury Bills.|
|Asset Class||Strategic Target||Range||Benchmark||Minimum Rating||Authorized Investments|
|Cash and Cash Equivalents||5%||0% – 15%||DEX 30 Day T-Bill Index||R1-low||Deposit receipts, deposit notes, certificates of deposit, bankers acceptances, guaranteed investment certificates, commercial paper and other similar instruments issued or endorsed by any chartered Bank to which the Bank Act (Canada) applies, Treasury Bills.|
|Bonds||50%||40% – 60%||DEX Universe Bond Index||BBB or higher||Federal, provincial or corporate. Maximum amount of ‘BBB’ rated bonds will be 15% of the total portfolio. All ratings are at time of purchase.|
|Equities – consisting of:
|35% – 55%
15% – 35%
10% – 30%
|S&P/TSX Composite Index||Equity investments shall be in common or preferred shares of any Company listed and publicly traded upon a recognized stock exchange, mutual funds, trust units, exchange traded funds (ETFs) thereto. Investment in preferred shares will be rated at least PFD-2 or higher by DBRS and rated at least BBB- or higher by Standard & Poors. Illiquid securities are restricted to 10% of the net assets of each pooled fund.|