Mission, Impact, and Compliance Monitoring for Investment Policy Statements | Acansa

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Speaker

Mary Cahill, CEO & CIO at Acansa Investment Management Group, Former CIO of Emory University 

 September's Investment Governance Initiative Call will feature perspectives from Mary Cahill, former CIO of Emory University and CEO & CIO at Acansa.

Acansa Investment Management Group is a firm that provides outsourced chief investment officer and integrated investment services to nonprofit endowments, foundations, and institutions. The call will dive into the intricacies of investment policy statements: what should be included, what metrics should be used to monitor compliance and effective execution, how to address mission and impact objectives, and why all of this is so important.

An institutional investment process begins with the Investment Policy Statement (IPS) – the critical document that provides the framework for managing the assets and details significant components that guide the process.  After stating the purpose of the fund(s), the IPS should address the return and risk objectives along with the time frame for measurements.  These metrics should be as specific as possible:  absolute or real (net of inflation) return targets, volatility measures, downside risks).  Liquidity constraints need to be included in order to inform the asset allocation policy along with risk and return.

Some organizations have additional objectives to align the funds with their mission/impact goals and these goals should be outlined in the IPS.  Such objectives would specify mission/impact related priorities, targets for risk and return (which may be the same as previously stated), metrics to measure success, and near and long-term target allocations.  Any specific restrictions should also be noted in the IPS. 

The most essential elements for the remainder of the IPS have two necessary components.  First, an Asset Allocation Policy that provides a target percent for each asset class and ranges around each target.  Benchmarks for each class and total fund may also be included.  Second, an outline of the roles and responsibilities for the individuals involved in the decision-making process to ensure good governance.  These individuals (and groups) should include the Board, the Investment Committee, the CFO and/or CIO, and the OCIO.

Documenting these critical factors that have significant impact on results is best practice.  Clarity for the decision makers can lead to effective execution and optimal results.

Participants will learn:

• How institutional investors can integrate mission and impact goals into investment policy statements from their genesis
• Best practices for creating an IPS that addresses critical factors impacting results
• Why allocators need to monitor compliance and effective execution, and which metrics will allow them to do so