KACL Investment Policy

PURPOSE

The goal of the KACL investment policy shall be to set out the guiding principles and establish a statement of the KACL’s investment policies and goals for the purpose of investing public funds, while meeting the related statutory requirements.

GUIDING PRINCIPLES

The KACL shall adhere to the following guiding principles in the consideration, purchase, disposal and administration of any KACL held investments:

a) Adhere to statutory requirements

b) Preservation of capital

c) Liquidity

d) Diversification

e) Yield

Adhere to Statutory Requirements

All investment activities shall be in compliance with the relevant sections of any applicable legislation and related regulations.

Preservation of Capital

Safety of principal is a primary objective of the investment program. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio.

Liquidity

The investment portfolio shall remain sufficiently liquid to meet all operating or cash flow requirements and limit temporary borrowing requirements. Furthermore, since all possible cash demands cannot be anticipated, the portfolio shall consist largely of securities with active secondary or resale markets. A portion of the portfolio may also be placed in local government investment pools that offer liquidity for short-term funds.

Yield

The KACL shall maximize the net rate of return earned on the investment portfolio, without compromising the other objectives listed previously. Investments are generally limited to relatively low risk securities in anticipation of earning a fair return relative to the assumed risk.

PRUDENCE

Investments shall be made with judgement and care, under circumstances then prevailing, which persons of prudence, direction and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of capital as well as the probable income to be derived. Authorized employees acting in accordance with this policy and exercising due diligence shall be relieved of personal responsibility for an individual security’s credit risk or market price changes.

DELEGATION OF AUTHORITY

Subject to the supervision of the Executive Director, the Director of Finance and Administration has overall responsibility for the prudent investment of the KACL’s portfolio. Authority to manage and implement the investment program may be granted for all or a portion of the KACL’s overall investment portfolio, to an external investment Agent, to act as an Investment Manager on behalf of the KACL, as determined through an independent and competitive bidding process. That Agent shall act in accordance with the established procedures and internal controls consistent with this investment policy.

SAFEKEEPING & CUSTODY

The Custodian services are to be provided by a designated Custodian.

INVESTMENTS

ELIGIBLE INVESTMENTS

Investments issued or guaranteed by the following institutions will be permitted by this policy, as deemed eligible by related Ontario regulations:

Institution	Type of Investment	Minimum Credit Rating
Government of Canada	Bonds Debentures Promissory Notes	n/a
Provincial Governments (Canada)	Bonds Debentures Promissory Notes	R-1 middle, AA
Other Investments approved by the Board of the Association	Bonds Debentures Promissory Notes	n/a
Schedule I banks Loan or trust corporations Credit Unions	Deposit Receipts Deposit Notes Certificates of Deposit Certificates of Investment Bankers Acceptances Bonds Debentures	R-1 middle, AA

For information purposes, the following table outlines the Dominion Bond Rating Service (“DBRS”) ratings used to indicate institutional quality for investment purposes:

Commercial Paper and Short Term Debt		Bond and Long Term Debt
Symbol	Credit Quality	Symbol	Credit Quality
R-1 (high)	Highest	AAA	Highest
R-1 (middle)	Superior	AA	Superior
R-1 (low)	Satisfactory	A	Satisfactory
R-2 (high)	Adequate	BBB	Adequate
R-2 (middle)	Adequate	BB	Speculative
R-2 (low)	Adequate	B	Highly Speculative
R-3 (high)	Speculative	CCC	Very Highly Speculative
R-3 (middle)	Speculative	CC	Very Highly Speculative
R-3 (low)	Speculative	C	Very Highly Speculative
D	In Arrears	D	In Arrears
NR	Not Rated

REPORTING

The Manager of Finance & Administration shall submit an annual investment report to the Board, together with the annual audited KACL Financial Statements. The investment report should include the following:

a) A listing of individual securities held at the end of the reporting period by maturity date;

b) A statement about the performance of the portfolio of investments of the KACL during the period covered by the report;

c) A description of the estimated proportion of the total investments of the KACL that are invested in its own long-term and short-term securities to the total investment of the KACL and a description of the change, if any, in that estimated proportion since the previous year’s report;

d) A statement by the Manager of Finance & Administration as to whether or not, in his or her opinion, all investments were made in accordance with the investment policies and goals adopted by the KACL;

e) A record of the date of each security transaction, including a statement of the purchase and sale price of each security;

f) Such other information that the Council may require or that, in the opinion of the Manager of Finance & Administration, should be included.

PERFORMANCE BENCHMARKS

The investment portfolio will be managed in accordance with the parameters specified within this policy. The portfolio should obtain a market average rate of return throughout budgetary and economic cycles that is commensurate with the investment risk constraints and cash flow needs of the KACL. Market yields should be higher than the rate given by the KACL’s bank for the various bank accounts.

MARKET VALUE

The market value of the portfolio shall be calculated at least annually as at March 31^st.

SIGNING AUTHORITY

Transactions related to investments made by the KACL require staff approval by the Executive Director. In the absence of that individual, staff approval may be given by the Acting Executive Director

MAXIMUM MATURITIES

To the extent possible, the KACL shall attempt to match investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the KACL will not directly invest

in securities maturing more than two (2) years from the date of purchase.

CURRENCY

The KACL shall not invest in a security that is expressed or payable in any currency other than Canadian dollars.

EXEMPTION

Any investment currently held by the KACL that does not meet the guidelines of this policy shall be exempted from the requirements of this policy. At maturity or liquidation, such monies shall be reinvested only as provided by this policy.

RESPONSIBILITIES

Executive Director

• Obtain adequate insurance coverage to guard against any losses that may occur due to misappropriation, theft, or other unscrupulous acts of fraud with respect to the KACL’s financial assets

 

• Executes and signs documents on behalf of the KACL.

Manager of Finance & Administration

• Enters into arrangements with Investment Managers;

performs all other related acts in the day to day operation of the investment and cash management program; and

• Develops and maintains all necessary operating procedures for effective control and management of the investment function and reasonable assurance that the KACL’s investments are properly managed and adequately protected.

• Provides regular reports (quarterly, at a minimum) to Administration, which include the performance and risk characteristics of the KACL’s Investment Portfolio and meets with Administration as required;

• Recommends changes to established investment policy that are deemed appropriate;

 

 

• Provides safekeeping of the Investment Assets;

• Processes transactions as directed by the Investment Manager(s) and / or the KACL;

• Collects interest, dividends and the proceeds of cash equivalent and fixed income instrument maturities;

• Deposits funds and pays expenses as directed by the KACL;

• Maintains a record of all transactions;

• Provides regular (monthly at a minimum) reports to the KACL; and

• Provides the Investment Manager(s) and the KACL with information required to fulfill their duties. May act as custodian.