To establish and define the authority for, objectives of, limitations applicable to, and reporting and review for CWI’s investment program.
Applies to all investments of CWI funds.
Diversification: A risk management technique that mixes a wide variety of investments within a portfolio.
Liquidity: Ability to quickly convert an investment portfolio to cash with little or no loss in value.
Moody’s Rating Scale: A rating by Moody’s reflects its opinion of the credit quality of individual obligations or of an issuer’s general credit worthiness. The rating scale, running from a high of Aaa to a low of C, comprises 21 notches. It is divided into two sections, investment grade and speculative grade. The lowest investment-grade rating is Baa3.
Rate of Return: Gain or loss on an investment over a specified period, expressed as a percentage of the initial investment.
Total Return: Actual rate of return of an investment or a pool of investments over a given evaluation period. Total return includes interest, capital gains, dividends and distributions realized over a given period of time.
This policy establishes and defines the authority for, objectives of, limitations applicable to, and reporting and review requirements for CWI’s investments program. The purpose of this policy is to ensure that investments of CWI’s funds are made in a fiscally responsible manner in accordance with CWI’s mission. Accordingly, all investments of CWI’s funds are subject to the guidelines set forth below.
Investment authority for CWI funds is delegated by the Board of Trustees to the Vice President of Finance and Administration (VPFA) and those persons whom the VPFA shall designate to exercise such authority. The VPFA, and his or her designees, shall have, subject to the review and oversight of the Board of Trustees’ Finance Committee and the guidelines set forth in this policy, all authority as may be necessary for the investment of CWI funds and the periodic liquidation and reinvestment of such funds.
Safety: Preservation of principal is the single most important objective of CWI’s investment program. Investments must be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The objective will be to mitigate credit and interest rate risk.
Liquidity: The investment portfolio shall remain sufficiently liquid to meet all financial needs and obligations that may be reasonably anticipated. This will be accomplished by structuring the portfolio so that securities mature concurrently with anticipated cash requirements. While CWI purchases securities with the intent of holding them to maturity, it may liquidate early to maximize the total return on assets, to compensate for temporary shortfalls in liquidity, or to address changes in market conditions or the credit rating of specific investments.
Yield: The investment portfolio shall be designed with the objective of seeking maximum yield or total return throughout budgetary and financial cycles, subject to and consistent with the safety and liquidity objectives previously described above.
Standard of Conduct: CWI and its investment managers shall comply with the standard of conduct in managing the investment of CWI’s funds under the Uniform Prudent Management of Institutional Funds Act for the State of Idaho (Idaho Code §§ 33-5001, et seq.).
Investment of CWI funds pursuant to the authority granted by this Policy shall be carried out by the VPFA and his or her designees in accordance with the following limitations and constraints:
Investment Medium: All investments will be denominated in U.S. Dollars. Permitted Investments:
Except as set forth in Paragraph 2 below, funds may be invested in the following (subject always to meeting the credit requirements set forth below). The permitted investments are described in Idaho Code § 67- 1210, and include:
Pursuant to Idaho Code § 33-701(2), (i) all or part of any plant facilities reserve fund, (ii) any fund accumulated for the payment of interest on, and the redemption of, outstanding bonds, or other obligations, and (iii) the proceeds of any bond issue temporarily invested pending the expenditure of such proceeds for the purposes for which such bonds were issued, may be invested in, in addition to investments permitted by Section 67-1210, in investments permitted by Section and 67-1210A, Idaho Code.
Where CWI loan covenants, bond covenants, or applicable regulations require funds held subject to their limitations to be restricted to a subset of the forgoing investment vehicles, such restriction shall be observed with respect to the funds governed by such requirements. The fact that any such covenant or regulation may permit a broader range of investment vehicles than those set forth above shall not serve to broaden the permitted range of investment vehicles.
Rating Scale: CWI will use the Moody’s Rating Scale (or the equivalent from Standard and Poor’s or Fitch Ratings) as the standard when evaluating investments in debt securities in order to limit the credit risk of such holdings.
At the time of acquisition, all investments must meet the following credit quality criteria:
Long-term Investment: CWI will seek to control interest rate risk in long-term investments by attempting to match anticipated cash requirements to investment maturities. Generally, in conjunction with maintaining proper liquidity, the investment program should remain flexible enough in its design to enable CWI to take advantage of opportunities in a changing interest rate environment.
The maximum maturity of any security purchase will be five years. The average weighted maturity of any managed portfolio will not exceed 36 months. For securities with puts or resets, the maturity date will be deemed the put or reset date of the security.
Investments will be diversified in order to minimize the risk of loss resulting from the concentration of assets. Individual investments and managed portfolios shall meet the following criteria:
| Security | Individual Limit | Aggregate Portfolio Limit |
|---|---|---|
| US government securities and US government sponsored | No limit | No limit |
| State of Idaho securities | No Limit | 25% of portfolio |
| State of Idaho investment funds (LGIP, DBF, etc.) | No Limit | No Limit |
| FDIC Passbook Savings Account | Limited to FDIC Insurance Amount | No Limit |
| Bank certificates of deposit | Limited to FDIC Insurance Amount | No Limit |
| Money market funds | 5% of total money market fund value | No Limit |
| State of Idaho and its municipalities, including any county, city, metropolitan water district, municipal utility district, school district, institute of higher education or other taxing district. |
A. Limited to 20% of issue size. B. Limited by issuer (at purchase date) to 10% of the investment portfolio |
25% of portfolio |
| Non-government issuers - excluding financial institutions. |
A. Limited to 20% of issue size. B. Limited by issuer (at purchase date) to 5% of the investment portfolio |
40% (Includes all non-government issuers) |
| Non-government issuers - financial institutions. |
A. Limited to 10% of issue size. B. Limited by issuer (at purchase date) to 5% of the investment portfolio |
40% (Includes all non-government issuers) |
Non-Eligible Investments
This policy prohibits CWI from any investment activity that would be considered speculative in nature according to principles of conservative investment management, whether or not the activity is specifically prohibited elsewhere in this policy.
Securities shall be held in the name of CWI by an independent safekeeping agent.
The VPFA shall prepare a written quarterly report of investment portfolio performance statistics. The report shall be reviewed by the Board of Trustees’ Finance Committee.