Investment Objectives

  The primary objectives in investing assets of the Pooled Fund shall be:

• The preservation and enhancement of the capital’s purchasing power through adequate diversification in high quality investments and based on a long-term investment horizon
• The achievement of a superior investment return obtainable within the boundaries of an acceptable degree of risk
• To maintain a payout rate sufficiently below the anticipated long-term annual return to achieve the stated goals

As of April 1, 2004 the payout rate has been set at 5 %, meaning that 5% of a fund’s capital will be available for charitable spending annually.

Investment Guidelines

The Pooled Fund shall be invested, using external managers, in fixed income, equities, and alternative investments in such proportions as may be established from time to time by the Investment Committee and as approved by the Executives of the Jewish Community Foundation and FEDERATION CJA. Liquidity, flexibility and preservation of capital, while earning a responsible return are primary considerations in the management of the assets. A review of the asset mix will occur at regular intervals to ensure that it remains appropriate to the Foundation requirements and current legislation. The target earnings level is 8% annually. Diversification in choosing asset classes and within asset classes is stressed. For the most part “managers of managers” are chosen for equities and hedge fund investments.

Investment Management

The Pooled Fund shall be administered under the guidance of the Investment Committee whose responsibilities include:

• Development of investment strategies and philosophies
• Investment objectives and decisions
• Asset mix targets and ranges
• Appointment and termination of investment managers
• Evaluating investment manager performance

Asset Mix (revised May 2009)

The virtually infinite time horizon of the fund dictates the adoption of a long-term asset mix policy favouring a high investment in equities along the following parameters:

A review of the asset mix will occur at regular intervals to ensure that it remains appropriate to the Foundation's requirements.

Rebalancing

It is the Foundation’s policy to rebalance to its target asset allocation on a regular basis so as not to deviate significantly from the return and risk profile of the investment portfolio. The method of rebalancing will be based upon the “tolerance” rebalancing formula, which states that the portfolio will be rebalanced to the target asset allocation if any asset or sub-asset class weight falls outside the indicated minimum or maximum percentages of total market value. Rebalancing will be considered on a quarterly basis and use cash flows to the extent possible.

Asset Classes

Cash/Cash Equivalents
Investment of cash reserves in short-term paper shall be confined to obligations of Federal or Provincial governments, chartered banks, major trust companies, or top quality (“R1”) corporate credits.

Bonds
Credit ratings of individual securities in passively managed accounts will be in accordance with the construction of major Canadian Fixed income indexes. Corporate bonds, debentures, and other debt securities shall have a rating of “A” or better or the equivalent thereof according to a recognized bond rating service.

Equities
No more than 10% of the market value of the equity portfolio shall be invested within any one company at any time.
No more than 30% of the total market value of the section shall be invested within any generally recognized industry group at any time.
Borrowing to purchase is not permitted.
Short selling is not permitted.

Alternative Investments
Alternative investments will be invested only through funds of funds to achieve diversification and reduce risk. Notwithstanding the prohibition under equities, short-selling leverage and derivative positions may be used in this asset class.

Use of derivatives
Derivatives may be used for hedging and risk management including the hedging of foreign currency exposure.

U.S. Foreign Currency Exposure
Given the significant component of investment in U.S. dollars and the Foundation’s responsibility to make distributions in Canadian dollars, 50 to 100% of the fund’s U.S. investments must be hedged against the Canadian dollar.

Performance and Manager Evaluation

Benchmark Performance:
Annualized rates of return over a moving three-year period will be compared to appropriate benchmarks within the specific asset classes as follows:

Cash	90-day T-Bill returns
Bonds	Scotia Capital Bond Universe Index
Canadian Equities	S&P /TSX Composite Index
American Equities	S&P 500 Composite Index
International Equities	MSCI World Ex-US Index
Hedged Investors	S&P 500 Composite Index
Absolute Return Hedges	3-mth T-bill 200bp

Performance will be compared to benchmarks on a quarterly basis.
In addition, on an annual basis, the committee will compare performance with the “Commonfund Benchmarks Study for Foundations” focusing on institutions of a similar size to the JCF.

Absolute Performance:
The Fund’s annualized rate of return over a moving three-year period must surpass the Canadian rate of inflation over this period.

Manager Selection:
The committee must investigate the qualities, characteristics and methods of each money manager and identify the role each plays in the furtherance of the investment strategy and the strategy’s needs. Specifically money managers are chosen within the context of the strategy and meeting the need.

Investment Expenses:
The committee must examine the reasonableness of investment expenses on an annual basis.

Investment Expenses:
There is no socially responsible investment strategy set out by the committee.

General

If at any time an investment or group of investments within the Pooled Fund does not conform with the Asset Mix guidelines as outlined above, the Investment Committee shall exercise its best judgement as to the action required to correct the situation. If it appears that the situation will be corrected within a reasonably short period, they may elect not to liquidate the temporary non-conforming investments.