The document provides information on investment management strategies for conservation trust funds (CTFs), including establishing goals and managing risk through asset allocation. It discusses diversifying assets, rebalancing portfolios, and screening for environmental factors. A spending formula example is given for expected annual returns from total return, gifts, spending rule, expenses, and inflation. Key factors that influence CTF investment performance are identified as size, assets, allocation, return criteria, advisors, and benchmarks. Case studies demonstrate income strategies over time from equity to declining shares. Best practices are outlined as clear guidelines, investment committees, and outside advisors.

1. Investment Management
Basic Training on Conservation Trust Funds
Cape Town, South Africa March 31 – April 2, 2009

2. “The true objective of any long-term investor is
maximum total real return after taxes.”
Sir John Templeton

3. A Successful Investor…
establishes realistic long-term goals
manages risk through asset allocation
is unemotional in the decision-making process
selects investment vehicles carefully
continuously monitors performance
ensures minimal transaction costs
can change managers at little to no expense

4. Investment Management Strategy
diversified asset base
flexible spending policy
regular evaluation and modification
rebalancing of asset allocation
environmental screening

5. Income Spending Formula
Spending Policy
Income/Spending Expected Annual Rate
Total Return 9%
Gifts +2%
Spending Rule -5%
Admin Expense -1%
Inflation -3%
= Real Growth +2%

6. CTFs allocate assets by:
type – fixed income, equity, cash, and other
geography – US, domestic, and international
currency – domestic , US, EU, and other

7. CTF’s Investment Performance
depends on:
size and period of operations
amount of invested assets and ROI
asset and currency allocation
ROI criteria
investment advisors
investment restrictions
benchmark performance

8. Case Study:
The Eastern Arc Mountain Fund
Steady Stream of Income Strategy
“Accrual” period until end of 2008
Heavier stock portfolio during accrual phase
Entered into an “income” phase in 2009
Declining equity portion during income phase

9. Case Study:
Ecuador National Environment Fund
$23 million endowment
Invests in US and national markets
Reviews investment portfolio regularly
Financial crisis had no impact on PA spending

10. To sum up…
Best practice in investment management
Establish clear investment guidelines
Form investment committees
Hire outside professional advisors

11. Questions???
How well are CTFs generally performing?
Why is a well-defined spending policy so
important?