The Handbook For Investment Committee Members ─ How To Make Prudent Investments For Your Organization

Comprehensive coverage of what it takes to be a responsible member of an investment committee

In a clear, organized, and easy-to-understand manner, this handbook explains the responsibilities and expectations of investment committee fiduciaries for pension funds, endowment funds, and foundations. Emphasizing all the do's and don'ts to follow for prudent investment management, this invaluable resource covers topics ranging from investment policy, asset allocation, and risk assessment to understanding information presented at committee meetings, asking meaningful and productive questions, and voting on recommendations knowledgeably. This book will empower readers with all the knowledge they need to feel confident in the investment decisions they make for their organizations

RUSSELL L. OLSON, a consultant on institutional investing, retired in 2000 as the director of pension investments worldwide for Eastman Kodak. He had overseen Kodak's pension funds since 1972. Over the last thirty years, Olson also worked with a range of endowment funds. He was named one of America's nine best pension officers by Institutional Investor magazine in 1987 and was Investment Management Institute's first Plan Sponsor of the Year in 1993. Olson is also the author of The Independent Fiduciary: Investing for Pension Funds and Endowment Funds, also published by Wiley.

Acknowledgments.

Introduction.

Organization of this Book.

CHAPTER 1: The Investment Committee.

Standards to Meet.

Committee Organization and Functions.

Interaction of Committee and Adviser.

Social Investing.

In Short.

APPENDIX 1: Example of an Investment Committee’s Operating Policies.

CHAPTER 2: Risk, Return, and Correlation.

Return.

Risk.

Correlation.

Risk-Adjusted Returns.

Derivatives—A Boon or a Different Four-Letter Word?

In Short.

CHAPTER 3: Setting Investment Policies.

Time Horizon, Risk, and Return.

Policy Asset Allocation.

Preparing a Statement of Investment Policies.

In Short.

CHAPTER 4: Asset Allocation.

Characteristics of an Asset Class.

Asset Classes.

Putting It All Together.

In Short.

CHAPTER 5: Alternative Asset Classes.

Liquid Alternative Assets.

Illiquid Investments.

Private Asset Classes.

In Short.

CHAPTER 6: Selecting and Monitoring Investment Managers.

Three Basic Approaches.

Criteria for Hiring and Retaining Managers.

Hiring Managers.

Retaining Managers.

In Short.

CHAPTER 7: The Custodian.

Custodial Reporting.

Management Information.

In Short.

CHAPTER 8: Evaluating an Investment Fund’s Organization.

Investment Objectives.

Asset Allocation.

The Fiduciary Committee.

The Adviser.

Investment Managers.

CHAPTER 9: Structure of an Endowment Fund.

The Total Return, or Imputed Income, Approach.

“Owners” of the Endowment Fund.

In Short.

APPENDIX 9: The Total Return or Imputed Income Method.

CHAPTER 10: What’s Different about Pension Funds?

Pension Plan Liabilities.

Investment Implications.

In Short.

CHAPTER 11: Once Again.

Glossary.

Bibliography.

Index.

About the Author.