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 Distribution Policy;
- Establishing the strategic asset allocation policy;
- 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 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 strategic asset allocation policy, 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 endowment shall distribute spendable income equivalent to:
- Fifty percent of the allowable draw per unit of the previous year, increased by 2.0%; plus
- Fifty percent of the long-term draw rate of 5.0% applied to the 16 quarter market value average of the endowment unit value for the period ending November 30 of the fiscal year preceding the budget year.
- After computing the proposed draw, the draw amount per unit shall be compared to the unit value of the endowment on the November 30 date; the proposed draw per unit shall not be more than 6.0% or less than 4.0% of that value.
- The Administration and Finance Committee of the Board will allocate the spendable amount to operating and/or capital budgets, or to a spending reserve.