"Investment committees are responsible for trillions of dollars of capital market assets. Thanks to Rusty Olson's masterful handbook, these committees can finally shed folklore, follow-the-leaderism, and obsolete rules-of-thumb. With the guidance of this handbook, they will have a firm sense of mission, clear mandates, and professional and sophisticated decision-making."
—Peter L. Bernstein economic consultant to institutional investors author of Against the Gods: The Remarkable Story of Risk
"Rusty has blended his vast experience in institutional investing to produce a valuable how-to guide for new investment committee members and a useful reference tool for more experienced investors."
—Michael P. Manning, CFA President, New England Pension Consultants
"Rusty Olson was a path-breaking plan sponsor during his years at Kodak. His Handbook is a unique guide for any investment fiduciary in a plan sponsor setting that is grappling with the role they should play—either as committee member, consultant, or plan sponsor. Olson's contribution to the investment industry continues with work like this excellent book."
—Steven C. Case, CFA Managing Director, Consulting CRA RogersCasey
The Handbook for Investment Committee Members clearly explains the responsibilities and expectations of investment committee fiduciaries for pension funds, endowment funds, and foundations. From understanding investment policies and asset allocation to asking meaningful questions and voting on recommendations knowledgeably, this comprehensive guide will prepare you to make even the toughest decisions with confidence.
Introduction.
Organization of this Book.
CHAPTER 1: The Investment Committee.
Standards to Meet.
Committee Organization and Functions.
Interaction of Committee and Adviser.
Social Investing.
In Short.
APPENDIX 1: Example of an Investment Committee’s Operating Policies.
CHAPTER 2: Risk, Return, and Correlation.
Return.
Risk.
Correlation.
Risk-Adjusted Returns.
Derivatives—A Boon or a Different Four-Letter Word?
In Short.
CHAPTER 3: Setting Investment Policies.
Time Horizon, Risk, and Return.
Policy Asset Allocation.
Preparing a Statement of Investment Policies.
In Short.
CHAPTER 4: Asset Allocation.
Characteristics of an Asset Class.
Asset Classes.
Putting It All Together.
In Short.
CHAPTER 5: Alternative Asset Classes.
Liquid Alternative Assets.
Illiquid Investments.
Private Asset Classes.
In Short.
CHAPTER 6: Selecting and Monitoring Investment Managers.
Three Basic Approaches.
Criteria for Hiring and Retaining Managers.
Hiring Managers.
Retaining Managers.
In Short.
CHAPTER 7: The Custodian.
Custodial Reporting.
Management Information.
In Short.
CHAPTER 8: Evaluating an Investment Fund’s Organization.
Investment Objectives.
Asset Allocation.
The Fiduciary Committee.
The Adviser.
Investment Managers.
CHAPTER 9: Structure of an Endowment Fund.
The Total Return, or Imputed Income, Approach.
“Owners” of the Endowment Fund.
In Short.
APPENDIX 9: The Total Return or Imputed Income Method.
CHAPTER 10: What’s Different about Pension Funds?
Pension Plan Liabilities.
Investment Implications.
In Short.
CHAPTER 11: Once Again.
Glossary.
Bibliography.
Index.
About the Author.
