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                                 RFP 2009-01 Investment Management
                                     Pre- Bid C...
be notified on October 15, 2008. The finalists will be asked to return on October 22 and 24 for
        interviews and pre...
Response: Market trends, financial tools that the firm would use in their day to day
    business. What is your financial ...
13. What is going to be incorporated into the new investment policy?
                Response: We are looking to streamlin...
4. What is the spending policy?
Response: There is no established "Spending" Policy". Any "Spending" is made after a vote ...
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Minutes RFP 2009-01 Investment Management Pre- Bid Conference ...


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Minutes RFP 2009-01 Investment Management Pre- Bid Conference ...

  1. 1. Minutes RFP 2009-01 Investment Management Pre- Bid Conference Minutes Tuesday, September 9, 2009, 10:00 A.M. Presiding: Andrew Soll, V.P. Finance and Facilities; Joseph Donovan, Executive Director, Finance and Treasurer; Matilda DelVecchio, Assistant to the Executive Director of Finance for Special Projects; Evelyn Wilson, Director of Purchasing. 1. Attendees were welcomed and the panel presiding was introduced. 2. The background and purpose was described. The Salem State College Foundation and the Salem State College Assistance Corporation are legally and financially separate entities from the College. This RFP pertains only to the College. As of June 2008, the investments were valued at approximately $9 million. Currently, these funds are managed by Eastern Investment Advisors. The last bid was in 1999 and revised slightly in 2004. Therefore, the Board of Trustees felt it was their fiduciary responsibility to put this out to bid, to explore the market. There are no established spending rules. Draw downs are handled on a case by case basis. These funds are not used for operations. The Board votes and approves any draw downs. The investment policy is being revised by the Board of Trustees. It is not expected to be substantially different from the existing policy that was made available. It provides clarification and information on organizational structures and parameters for investing. The policy allows the fund manager(s) full discretion within the confines of the policy. The College relies on the expertise of the fund manager(s). Communication can be ad hoc. However, monthly reports and quarterly are required. In addition, an annual report and an annual meeting with Finance and Facilities Committee and the full Board of Trustees will be required. The Finance & Facilities committee is a sub -committee of the Board of Trustees. 3. The timetable was reviewed. All RFP proposals are due on September 15, 2008 at 3:00 P.M. sharp in the Purchasing Department. Anything received after 3:00 P.M. will not be accepted. The initial review will take approximately one month (9/15/08-10/15/08). Joseph Donovan, Andy Soll, and three Board of Trustees’ Finance and Facilities Committee members will review the proposals. The finalists will
  2. 2. be notified on October 15, 2008. The finalists will be asked to return on October 22 and 24 for interviews and presentations lasting approximately ninety minutes. There is no set number of finalists. These interviews will take place in the Salem Room at the Alumni House on the second floor of the South Campus. Directions will be sent prior to the event and/or they can be found on our website. The Account Representative from the firm who will oversee the account must be present at this meeting. The format of the meeting will be three parts; interview, presentation, and questions. The review team will make a recommendation to the Finance and Facilities Committee; they, in turn, will make a recommendation to the Board of Trustees. The Board will vote at its November 19, 2008 meeting. We anticipate the successful bidder to be notified on November 20, 2008. Contract begins and exchange of assets by December 22. 4. Specific key elements of the RFP are the following: Section 5 - General Conditions Section 9 - Proposal response - follow the format and identify which section of the RFP is being addressed. 5. Questions from the responders: 1. Are you talking about a prudent man or a prudent investor? Response: We are talking about prudent investor with a high level of expertise. 2. Are the funds in buckets of 1 year, 2 year, and 5 year? Response: Fixed income portfolio, and the fixed income should have some level of flow for short term cash. Currently, our investments are 60% equities and 40% fixed income but it can deviate. Within the RFP there should be some discussion about standard indexes and benchmarks. 3. What are you looking for as far as allocations? Is the college looking for recommendations for equities and allocations? Response: The College is looking for the firm’s expertise, strategies and recommendations. We want the firm to show the College their idea of risk vs. returns. As a prudent investor you balance appropriately. What balance would be appropriate. There will need to be some dialogue. 4. Could you clarify Section 9.5? Response: Describe your firm’s structural oversight, the board, the CEO, who signs off at your end. Advise what you have done at your firm for management oversight. 5. Do you have an investment matrix?
  3. 3. Response: Market trends, financial tools that the firm would use in their day to day business. What is your financial model, explain it. What tools do you use to buy, sell or hold. 6. What is an example of a drawdown and how was it communicated? Response: The last drawdown was approximately $300,000 that was used to seed online program development. The college goes to the Finance and Facilities Committee to approve the action to drawdown funds, the action is then brought to the Board of Trustees for final approval. There is approximately a two week lead time. Another example is a lease agreement for the computer system where the income was averaged over the period of the lease agreement. These funds are not used for operating expenses. It is not done readily. 7. Is there full discretion or any restrictions? Response: There is not a temperament for hedge funds, derivatives, things like that. The college is looking for A rated bonds. At the present time, we are not looking at social consciousness. Colleges have signed on for sustainability but it is still at the discussion point. There are no restrictions at this point. 8. Is there a mandate for specific funds? Response: No, it includes the full range. 9. To counter capital outlays, what is the replenishment? Response: There is no current inflow mechanism at this stage. The funds are generated within the account. No state funds are included in portfolio. 10. What was done prior to 1999? Response: At that time there was no formal investment policy; it was spread out, no one manager. 11. What was it like 15 to 20 years ago? What was established, what is the history? Would it be in our interest to look at the history? Response: Since 1999 different vehicles have been used by the College. We are open to recommendations and various investment tools as long as it follows prudent investment rules. We will rely on the investment management team for their advice. 12. What types of changes need to be approved? Response: Any new class of investments to be incorporated in the mix. Communication does not necessarily have to be day to day. But there should be open communication via telephone, and e-mail. We will relay on your expertise. If there was a new class of equities or fixed income, it must be brought to the management’s attention.
  4. 4. 13. What is going to be incorporated into the new investment policy? Response: We are looking to streamline the policy and make it more clear in terms of the College reporting and be more fluid so that it is easier to work with investors. We are trying to just clarify operations and reporting but nothing substantive. 14. If the Committee is recrafting the investment policy was there anything lacking? Response: No, we are updating, revising, providing a range of operations, processing, reporting. There are internal inconsistencies, we are clarifying roles. The policy does not say what to invest in; the board wants to keep it broad enough to allow managers to make their own decisions. 15. Have there been changes over the years or how have the investments grown? Response: They have grown from 7 to 9 million in the past five years. It has done better than benchmarks. Apart from the draw-downs cited earlier, there have been no other draw downs so we have been able to invest on a planned basis. The College has developed a strategic plan, capital master plan, and debt policy. It has evolved in that there is a broader range of investments to keep pace with the market and the goals of the college. We will try to link the strategic plan with the investment management strategy. We want to be ahead of the benchmarks. 16. Is there a possibility of selecting multiple vendors? Response: It has not been ruled out. We are open to the possibility. _____________________________________________________________________________________ The following questions were submitted by email prior to the pre-bid conference: 1. Confirmation that this if for operating assets and not long-term (endowment) assets? Response: No this will include both short term and long term assets which will function more along an Endowment based portfolio. Although from time to time the Board will approve draw downs for special purposes. There is no specific Spending Rate associated with this portfolio just on an as needed basis by Board vote. 2. If an operating pool, the time horizon of the pool - daily, monthly, quarterly, and/or annual liquidity? Response: On an as needed basis which will be communicated to the Fund Manager as approved by the Board. Generally we anticipate a 60-40 split between Equity and Fixed Income while recognizing there will be time when funds need to be "parked" in cash. 3. Given the time horizon, is the $9.0M pool subject to different time horizons and therefore objectives? Response: No specific or differing time horizons are anticipated at this time although for bonds we would anticipate a maturity in the 5-7 year range.
  5. 5. 4. What is the spending policy? Response: There is no established "Spending" Policy". Any "Spending" is made after a vote by the Board for a specific purpose upon recommendation of the Board's Finance & Facilities Committee. Generally we allocate 60 % Equities and 40% Fixed Income recognizing that market conditions will shift those during any one year. We also have not put any % of cash again recognizing the need sometimes to "park" monies for a temporary position or any anticipated short term needs. 5. In regards to the institution that currently provides your college with Investment Management services, is compensation to that firm for services rendered to your college based on a negotiated dollar amount per year for the life of the contract? If so, What is that annual dollar amount? Response: No. 6. Does the compensation to this existing vendor involve Professional Fees based on assets under management? If so, what is their Fee Schedule? Does this Fee Schedule also include all Transaction Costs (i.e. Ticket Charges) whenever trades Are executed. Response: Yes. The effective annual charge is approximately 43 basis points. 7. Who executes the trades? Is it your existing Investment Manager, or are they performed by a Third Party? Response: Our Investment Manager executes the trades. 8. What benchmarks do you compare your portfolio against in order to measure market performance? Is this one of the various market indices, or is it the Endowment Fund belonging to a larger academic institution? Response: Our Investment Managers provide appropriate indices - various market indices. 9. What are the credentials (Academic and Professional) of the broker who represents your existing vendor? Response: Our current Investment Manager is Eastern Investment Advisors.