6.5.5 Investment Portfolio
6.5.5.1 Overview
The Investment Pool was established in November 1986 and is administered by the Archdiocesan Catholic Center. Its name was changed to "Investment Portfolio" in the summer of 2023. The Investment Portfolio holds assets in trust for the benefit of various archdiocesan entities that participate in the Investment Portfolio (such as schools, parishes, autonomous pious foundations, and the seminary), legacy gifts and funds, and the archdiocese itself. The Investment Portfolio consists of an Income Portfolio and a Balanced Portfolio. All the funds are held and invested solely on behalf of and for the benefit of the particular participants.
The archdiocese adopts and implements a strategic asset allocation policy that is predicated on a number of factors, including:
The purposes of the two investment portfolios offered by the archdiocese
Historical and expected long-term capital market risk and return behavior
The perception of future economic conditions, including inflation and interest rate levels
The archdiocesan commitment to invest from a viewpoint of social responsibility and the commitment of the Catholic Church to its own social and ethical goals
6.5.5.2 Investment Committee
The Investment Committee is a subcommittee of the Finance Council of the archdiocese, responsible for overseeing the Investment Portfolio. The Investment Committee ensures that:
The fiduciary responsibilities of the archdiocese are fulfilled
The investment structure, operation, and results of the Investment Portfolio are consistent with the objectives of the Investment Portfolio's constituents
The funds are managed competently, with integrity and continuity
The Investment Committee establishes and regularly reviews investment policies. Its general objective is to create a diversified investment program that is managed on a total return basis. A variety of asset classes and strategic asset allocations balance risk and return. The Investment Committee relies on qualified investment managers and it delegates investment discretion to the managers, subject to the investment guidelines and policies it sets. The Investment Committee is assisted by outside investment consultants to independently measure investment performance, maintain the investment policy, advise on asset allocation, including rebalancing, and advise on investment manager selection.
6.5.5.3 Investment Portfolio Program
Surplus funds, tuition prepayments, restricted or designated donations and funds, endowment funds, building funds, and capital improvement funds of archdiocesan entities and locations are to be invested in the Investment Portfolio. "Surplus funds" are those funds in excess of three (3) months of a location's total operating expenses.
The Investment Portfolio program consists of the Income Portfolio and the Balanced Portfolio. The allocation between the Income Portfolio and the Balanced Portfolio is at the discretion of the participants and is dependent on their financial needs and objectives as well as their risk tolerance.
The Investment Portfolio operates on the total return concept, in which participants are allocated income (loss) based upon the total return earned on invested funds, including the realized and unrealized gains and losses.
6.5.5.4 Income Portfolio
The Income Portfolio is specially designed to accommodate short-term investment objectives. It is recommended for interim investment of funds committed to near-term operations, construction projects, etc. The objective of the Income Portfolio is to provide liquidity, preservation, stability of principal, and fully competitive money market rates of return. This portfolio is invested exclusively in high-quality, short-term, fixed-income instruments such as certificates of deposit, treasury bills, and other government securities.
In keeping with its purpose of liquidity, preservation, and stability of principal, the asset allocation of the Income Portfolio shall be invested in a portfolio of fixed-income securities with a maturity fewer than two years, with no individual security having a maturity greater than five years. The goal of the portfolio shall be to provide a modest incremental return over inflation and cash instruments.
A portion of the Income Portfolio will also be invested in loans to archdiocese participants. Under normal circumstances, the Loan Account shall not make up more than 50% of the Income Portfolio. Interest is charged on all loans to ensure that all participants in the Income Portfolio share in the return on investment.
Refer to the Loan Policy of the archdiocese for additional information regarding loans.
6.5.5.5 Balanced Portfolio
The Balanced Portfolio is geared to long-term investment objectives and is recommended for long-term surplus funds designated for endowment, future programs, and future projects. The objective of the Balanced Portfolio is to provide a total investment return sufficient to neutralize the impact of future inflation by investing for long-term appreciation through a combination of income and growth of principal. Consistent with this objective, the Balanced Portfolio is invested in a broader mix of marketable securities (including selected domestic and international equities from large, small, and growth capital classes), fixed income, and selected short-term investment instruments. The Investment Committee reviews the Balanced Portfolio regularly with the designated managers and, quarterly or more frequently if needed, the Balanced Portfolio is rebalanced or otherwise adjusted to meet market conditions and investment objectives.
6-17-21, 12-19-2023