Chapter 140: Investments
140.030 Investment Policy for Participant Directed Savings Plans
Bd. Min. 4-6-12.
- Introduction – The University has various retirement, supplemental retirement, and deferred compensation plans (“Plans”) that were established to provide tax deferred savings vehicles to qualified employees as described in each respective plan document and which permit participants to direct their investments in such Plans. This Investment Policy was established to provide direction for the selection and monitoring of investment options made available to participants within the Plans.
- Responsibilities and Authorities – The Board of Curators of the University of Missouri has delegated implementation of the Board’s policies to the President of the University. Operating and supervisory responsibilities related to the selection and monitoring of investment options made available to participants within the Plans shall be delegated to an Investment Oversight Committee (“Committee”) appointed by the President. The Committee shall utilize an external investment consultant, as needed, to assist with the fulfillment of responsibilities outlined in this Policy.
- Objectives - The Plans are a collection of long-term retirement savings vehicles and are intended as a source of retirement income for eligible participants. The investment options available within the Plans are intended to cover a broad range of investment risk and rewards appropriate for these kinds of retirement savings programs. Participants bear the risk and reap the rewards of investment returns that result from the investment options they select.
- Investment Options – The Committee shall ensure that a broad range of investment options are offered, allowing participants of the Plans the opportunity to structure an investment strategy that meets their individual return objectives and risk tolerances. The Committee may select investment options from any of the following broad asset classes:
- Stable Value
- Money Market
- Fixed Income (Domestic and International)
- Equities (Domestic and International)
- Global Tactical Asset Allocation
- Lifecycle / Target Date
- Investment Guidelines – The Committee shall establish objectives, guidelines and performance standards for investment options in each asset class or sub-asset class offered to participants of the Plans.
- Reporting and Monitoring – The Committee will review the investment options offered to participants of the Plans at least annually, including review of the following:
- Current trends and developments in the capital markets and investment management community (market review);
- The current level of diversification provided by the investment categories and options offered by the Plans under the core investment fund line-up (review of the correlation between investment categories and options);
- Changes in the investment management staff related to each investment option (organizational review);
- The continued consistency between the stated investment guidelines of each investment option and Fund policies (review of the guidelines of each investment option);
- The compliance of each investment option with stated investment guidelines (review of the holdings and characteristics of each investment option), including style drift analysis;
- The compliance of each investment option’s risk and return characteristics with the expectations stated herein (performance review).
- Investment Option Evaluation – The Committee, in its discretion, may conduct informal review and evaluation of an investment option at any time. The Committee may place an investment option under formal fund review, terminate an investment option, or “freeze” an investment option to new contributions for any of the following reasons:
- The investment option has not met the performance standards established by the investment guidelines established by the Committee;
- The investment option has changed its principal investment manager, or such change appears imminent;
- The investment option has had a significant change in ownership or control;
- The investment option has changed investment focus or has experienced style drift; departing from the investment objectives or parameters in its prospectus or “fact sheet”;
- The investment option is under investigation by the SEC or has violated a SEC rule or regulation;
- The investment option has changed its fee structure;
- For any reason, the Committee is uncertain about whether the investment option continues to meet the needs of the Plans.
- Formal Investment Option Review – When an investment option has been placed under formal review, the Committee shall conduct an evaluation of the investment option, its operations, and its performance. During the review, the Committee: 1) may suspend contributions to the investment option from existing participants and 2) may close the investment option to new enrollees. Upon completion of the evaluation, the Committee may continue the investment option under formal review status, remove the investment option from formal review, or terminate the investment option.
- If a positive conclusion is reached concerning the investment option’s manager’s continued ability to meet their performance criteria and investment constraints in the future, then no action will be taken. However, the Committee will revisit the performance issues within six months.
- If a positive conclusion is not reached concerning the investment option’s manager’s continued ability to meet performance criteria and investment constraints in the future, then the fund will be frozen and will trigger the termination of the fund.
- Termination of Investment Option – When the Committee terminates a fund:
- The Committee, with the investment consultant, will promptly seek a new investment option appropriate for the given asset class.
- The Committee will promptly notify all Plan participants that the Committee has terminated the investment option under the Plan.
- With regard to the terminated investment option, the Committee has the option to:
- Transfer, or “map”, the monies in the terminated investment option to another investment option of similar risk and return characteristics. The terminated investment option is then totally removed from the Plan; or
- Close the terminated investment option to future contributions; however, give the participants the option to keep the monies in the terminated investment option or to remove those monies.
- Default Option – The Qualified Default Investment Alternative (QDIA) will be a lifecycle fund based upon a participants’ normal retirement age. This election has been based upon guidelines under the Department of Labor rules and guidelines related to permissible default investment options.
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