77 Macalester Street Room 301
Charge to the Investment Committee
The Investment Committee, appointed by the Trustees of Macalester College, shall be responsible for:
- Recommending to the full Board overall Investment Objectives and Guidelines;
- Recommending to the full Board the Endowment Spending Policy;
- Establishing policy asset allocation;
- The selection and appointment of investment consultants and managers;
- The evaluation of portfolio performance; and
- The periodic reporting to the full Board of Trustees, including asset allocation & performance.
The Investment Objectives are to be achieved within the following guidelines:
- In well-functioning markets, riskier assets generally yield higher returns, creating a trade-off between these the College's investment objectives. A suitable balance between these objectives requires the College to maintain a diversified portfolio of assets which prudently balances risk and return.
- The endowment portfolio will be managed in accordance with its policy asset allocation, as established by the Investment Committee. The Investment Committee will establish a strategic asset allocation, based on long term expectations for asset returns and risk, but may, from time to time, determine that, over the short or intermediate term, it is prudent to make tactical deviations from the College's strategic investment policy.
- To the extent practicable, the endowment will be rebalanced and invested according to the policy asset allocation.
- The Investment Committee shall oversee the Macalester College endowment consistent with Board Policies regarding Investor Responsibility.
- Allowable vehicles for implementation of the portfolio include stocks, bonds, index and exchange traded funds, separately managed accounts, co-mingled accounts, mutual funds, limited partnerships, futures, swaps and other derivative contracts.
- Manager leverage or financing activities must be approved by the Investment Committee. No leverage will be employed at the portfolio level except as approved by the Investment Committee.
- The College has beneficiary interest in certain assets held in trust by others. The Committee shall monitor these assets and make recommendations regarding their management and disposition to the appropriate trustee(s) or governing board.
The Macalester College endowment shall distribute spendable income equivalent to 5% of a 16-quarter average market value of principal, on a unit basis. Costs of managing the endowment will be paid from the assets of the endowment, in addition to the endowment payout as defined above. The average is to include the November 30 quarter preceding the beginning of the budget year. Excess interest and dividends beyond the spendable amount, shall be added back to principal of the endowment. To the extent that the spendable amount, per this policy and formula, exceeds interest and dividends, principal appreciation and gift corpus may be expended unless prohibited by the corpus restrictions. The administration and Finance Committee of the Board will allocate the spendable amount to operating and/or capital budgets, or to a spending reserve.