FRIPP ISLAND PROPERTY OWNERS ASSOCIATION
INVESTMENT POLICY
ADOPTED 11/12/11
(Download PDF Here)
The Finance Committee of the FIPOA is given the responsibility
of making recommendations for any changes in the FIPOA Investment Policy Statement. The
following represents a substantial rewrite of the Investment Policy Statement which was approved on 10/19/2007.
Objective
The Fripp Island Property Owners Association has two types of
investment funds. Operating Funds have a cash management objective to preserve capital,
maintain liquidity and obtain a "money market" level of return. Reserve Funds
have an objective to preserve capital, maintain an adequate level of liquidity, and produce
the highest level of return within the risk parameters. Minimizing investment costs
(redemption fees, commissions, and other transactional costs) will aid in expanding returns.
With both types, safety is the prime objective and yield is a secondary objective. Liquidity
needs are met by structuring maturities to ensure availability of assets for projected or
unexpected expenditures. Safety is defined as a prudent combination of credit risk aversion
and well managed control of capital preservation in light of interest rate volatility.
Policies
- All Operating Investment and Reserve Investment monies will
be invested in compliance with the investment policy herein and the South Carolina
legal code as it relates to investments made by fiduciaries on behalf of non-profit,
incorporated community/homeowner associations. The Finance Committee of the Fripp
Island POA and the Board will review this Policy at least every three years or more
frequently should any change in the related regulatory codes mandate.
- Operating Investments are those made with the FIPOA's
operating cash and are currently administered through the General Manager of the FIPOA.
As these monies are used for the day-to-day operation of the POA, there is a need for liquidity.
- Reserve Investments are those made with the FIPOA's reserve
contributions; these can only be used for the major replacement and repair of long-term
assets overseen by the FIPOA. Since there are different terms of liquidity for these two
funds, the Reserve Funds will have a longer average maturity which normally results in a higher yield.
- The FIPOA Board will oversee the Reserve Funds, and it is expected
that the Board will contract the management of Reserve Investments with a professional
money manager. However, the Board may decide to assign the investment management
responsibility to the FIPOA Treasurer, a Board appointed committee or some combination
of the above. The Board shall review the investment manager's performance annually and
the professional management services should be re-bid every three years. The Investment
Policy must be followed regardless of who performs the investment management function.
Investments Permitted
- Savings, checking, money market, certificates of deposit
("CDs") and similar accounts insured by the Federal Deposit Insurance Corporation
(FDIC) or other like government agency. CDs are expected to be laddered and are subject
to maximum maturity of 3 years. Floating rate CDs (where the rate is linked to a market
index) are limited to a maximum maturity of 7 years.
- U.S. Government obligations to include Treasury Bills or Notes,
and Issues of Government Agencies. These are limited to a maximum average maturity of 7 years.
- The Board may approve the inclusion of Investment Grade Corporate
Bonds or Mutual Bond Funds which invest in the Permitted Investments. Equity securities
of any type are specifically excluded from either Investment Fund.
Assignment of Responsibility
The FIPOA Board of Directors is charged with the responsibility
for the management of the assets of the Operating Funds and the Reserve Funds. The Board,
through the Finance Committee, discharges its duties solely in the interest of the Funds,
using the care, skill, prudence and diligence under the circumstances then prevailing that a
prudent person, acting in a like capacity and familiar with such matters, would use in the
conduct of an enterprise of a like character with like aims. Specifically, the Finance Committee will:
- Develop and apply proper control procedures for both the Operating Funds and the Reserve Funds.
- Select qualified Investment Money Managers and monitor their performance.
- Project the amount and timing needs of the Operating Fund from
the Reserve Fund and communicate these to the Investment Manager of the Reserve Funds.
- Secure a quarterly Reserve Funds Investment Report from the
Investment Manager (or Committee) to be submitted with the financial reports to the members of the Board and Finance Committee.
November 12, 2012 - F.I.P.O.A. Board of Directors
(Download PDF Here)
