RSA Investment Committee Terms of Reference
The RSA Investment Committee (IC) was established in March 2012, following resolution of the dispute at the Rationalist Association of Australia (RAA) in December 2011. The RAA board agreed to transfer all (remaining) assets from the RAA to RSA Inc. and to voluntarily deregister the RAA.
As at March 2012, former RAA assets amount to some $500,000 in cash and shares. It is the responsibility of the IC to advise the RSA Committee on how to invest these assets in a prudent way, and to transparently report to the Committee on the portfolio’s investment performance.
The IC will comprise at least 3 people: the RSA President, another RSA Committee member with expertise in finance, investing, or accounting / auditing, and an external person chosen for their expertise in finance, investing, or accounting / auditing, and for their standing in the general community.
The RSA President will propose suitable appointees to the RSA Management Committee for their approval.
At November 2014, the members of the IC are:
- Dr Meredith Doig, President RSA Inc. and professional company director
- Anthony Englund, RSA Treasurer, with qualifications in law and accounting
- Kevin Quigley, external with expertise in accounting / auditing, and of good standing in the general community
- Leo Santalucia, external with expertise in accounting / auditing, and of good standing in the general community
- Determine whether to use external professionals to advise on investment strategy, and / or manage the RSA’s investments, and appoint such professionals if required.
- Establish investment objectives, constraints and guidelines that reflect the RSA’s financial goals.
- Formulate an appropriate asset allocation.
- Recommend an investment policy for approval by the RSA Committee.
- Implement an investment strategy consistent with the investment policy and asset allocation strategy.
- Monitor and review investment performance.
- Approve all significant investment actions.
- Monitor cash balances to meet liquidity needs.
Any member of the RSA Management Committee is free to attend meetings of the Investment Committee as an observer. The IC will meet at least quarterly to review investment performance. However, meetings may be held whenever deemed necessary by events such as:
- Significant changes in cash flow – eg, new bequests, capital investments, a significant requirement for cash by the RSA committee beyond the annual budget.
- Significant changes in the economic environment that might necessitate a change in the investment policy.
Statement of Investment Policy
The purpose of investing the funds ‘inherited’ from the RAA and any further funds donated to the RSA is to generate a stream of income that can be used by the RSA Inc. in pursuit of its objectives as described in its Rules, while seeking to preserve the capital base of the funds.
Bearing in mind the trade-off between risk and return, the objective of investing the RSA funds is to generate enough income to fund the annual operating requirements of the RSA Inc. while maintaining a low to moderate level of risk.
The aim is to protect and grow the capital base of the funds.
A ‘core + satellite’ mode of investment has been chosen to achieve a balance between a stable, medium-to-long term core and more responsive, shorter term investment vehicles. As of May 2014, this model comprises:
- 75% in a diversified growth-oriented index fund
- 25% in a small set of diversified Exchange Traded Funds (ETFs) and /or direct shares, chosen to achieve some exposure to high yield Australian securities, the US market and the world market ex-US.
There will be no investment in unlisted securities.
No more than 10% of the value of the portfolio will be invested in any one company.
No investment will be made in financial derivatives.
From time to time, the IC will recommend to the RSA Management Committee whether a professional Investment Manager should be appointed to manage the investments on its behalf, or whether it will do this itself.
Monitoring and Review
The performance of the portfolio will be measured against appropriate asset class benchmarks.
The ‘core’ investment will be reviewed every three to five years; the ‘satellite’ investments will be reviewed by the Investment Committee at its quarterly meetings and adjusted should market conditions change.
The Terms of Reference and Statement of Investment Policy will be reconsidered annually at the second meeting of each year.