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G/3.2 Investment policy |
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3.2.1 Policy objective 3.2.1 Policy objectiveQUT's investment policy is influenced by the University's corporate financial needs and objectives. Council has the power to invest QUT monies under the Statutory Bodies Financial Arrangements Act 1982 . Planning and Resources Committee is responsible to Council for the coordination of investment management and the approval of investment management policies for the University. Planning and Resources Committee assesses the ongoing validity of investment strategies and projections of interest income for budget purposes. 3.2.2 Investment strategyThe relationship between risk and return is fundamental to the University's investment strategy. QUT as a partly publicly funded entity, with an increasingly commercial focus, pursues the achievement of enhanced returns over the long term by investing in growth assets. To achieve its strategic objectives, the University supports a balanced Strategic Asset Allocation (SAA) for the Capital Component that comprises 70% growth assets and 30% lower risk investments. 3.2.3 Investment FundThe general objectives of the Investment Fund are to:
The investment time horizon to meet liquidity requirements is immediate to very short term. The investment time horizon for the capital component has a longer term investment horizon of seven years. The purpose of the QUT Investment Fund is to supplement operational income to meet various expenditure requirements of QUT as identified in such documents as the Consolidated Budget and Asset Management Plan. The Investment Fund consists of three components - Liquidity Component, Capital Component and Capital Stable Component. The purpose of the Liquidity Component is to meet current operational and capital expenditure. As such, investment of these funds is restricted to short term, generally at call, investments. Interest received from these investments is shown as income in the annual Statement of Financial Performance. Assets and ongoing operating cash considered surplus to that required for the Liquidity Component and the Capital Stable Component form the Capital Component. The purpose of the Capital Component is to produce income to supplement the operational and capital expenditure in the long term. The University's preference is that the primary fund manager diversifies risk by using a range of fund managers chosen according to their recognised expertise. It is the intention of the University normally to re-invest the income of the Capital Component to enable the asset to grow in the long term. Should circumstances dictate that assets need to be converted to cash in order to meet current needs, this will be achieved through the conversion and transfer of Capital Component assets to Liquidity Component cash. Any appreciation or depreciation in assets held from one financial period to the next is disclosed in the annual Statement of Financial Performance. The purpose of the Capital Stable Component is to manage Donated and Endowment funds (funds that have been obtained from various sources for use by QUT in the provision of scholarships, endowments etc) and funds where conditions are attached which require an investment in a more stable / lower risk product.3.2.4 Investment manager structureQUT retains Queensland Treasury Corporation (QTC) to manage the Liquidity Component and Queensland Investment Corporation (QIC) the Capital Component and the Capital Stable Component to be placed with the fund manager that ensures compliance to the requirements of the program. Both managers fall within Category 2 of the Statutory Bodies Financial Arrangements Act 1982 applicable to QUT. 3.2.5 Reporting proceduresPeriodic Investment managers are to provide a written report on the performance of their fund(s) against benchmark data, fund transactions and balances within five (5) days of the end of each month. The investment manager reports are to be used as a basis for periodic reporting from the Division of Finance and Resource Planning to Planning and Resources Committee. Annually Investment performance is also reviewed annually by the Division of Finance and Resource Planning, to assist Planning and Resources Committee to determine the continued feasibility of achieving the investment objectives, diversity of fund management and the appropriateness of the investment strategy. It is not expected that investment strategy will change frequently. Investment managers' performance is evaluated annually against appropriate sector benchmarks. 3.2.6 ManagementThe Executive Director, Finance and Resource Planning, is responsible for:
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