Investment Policy

Investment Policy

It is the policy of the Board of Directors (Board) to treat all assets of ASEE as if held by ASEE in a fiduciary capacity for the sake of accomplishing its mission and purposes. The following investment objectives and directions are to be judged and understood in light of that overall sense of stewardship. In that regard, the basic investment standards shall be those of a prudent investor as articulated in applicable state laws.

The Board has delegated supervisory authority over its financial affairs to the Finance Committee of the Board (Committee). The Committee is responsible for regularly reporting on investments to the Board. In carrying out its responsibilities, the Committee and its agents will act in accordance with these Investment Policies (the Policies) and all applicable laws and regulations. The Board reserves to itself the exclusive right to revise, or grant exceptions to, the Policies.

ASEE’s primary investment objective is to preserve its assets, by earning a total return for each fund (e.g., Operating Reserves, Endowments) appropriate to each fund’s time horizon, distribution requirements, and risk tolerance.

Asset Mix
To accomplish ASEE’s investment objectives, the Executive Director or manager is authorized to utilize portfolios of equity securities (common stocks and convertible securities), fixed-income securities, and short-term (cash) investments. The actual asset allocations for each portfolio shall be set by the Executive director or manager in conjunction with ASEE’s designated financial officer within the ranges provided in the table below. These ranges can only be modified by the Committee.

Asset Quality

  • Common Stock- The Executive Director\Manager may invest in any unrestricted, publicly traded common stock that is listed on a major exchange or a national over the counter market and that is appropriate for the portfolio objectives, asset classes, and /or investment style of the fund that is to hold such shares.
  • Convertible preferred stock and convertible bonds-The Executive Director\Manager may use convertible preferred stock and bonds as equity investments. The quality rating of convertible preferred stock and bonds must be BBB or better, as rated by Standards & Poor’s, or BAA or better, as rated by Moody’s. The common stock into which both may be converted must satisfy the standard if section 1, above.
  • Fixed- Income securities- The quality rating of bonds and notes must be A or better, as rated by Standard & Poor’s or Moody’s. The portfolio may consist of only traditional principal and interest obligations (no derivatives) with maturities of seven years or less.
  • Short-term reserves-The quality rating of commercial paper must be A-1, as rated by Standard & Poor’s, P-1, as rated by Moody’s, or better. The assets of any money market mutual funds must comply with the quality provision for fixed-income securities or short-term reserves.

Asset Diversification
Reasonable diversification must maintained at all times and may not be invested in the equity securities of any one company that exceed 5% of the portfolio (at the time of purchase) nor allow the total securities position (debt and equity) in any one company to exceed 10 percent of the portfolio. Reasonable sector allocation shall also be maintained where no more than 25 percent of the portfolio may be invested in securities of one sector.

Investment Limitations
All purchases shall be for cash and there will be no margin transactions, short selling, or commodity transactions. In addition, there will be no direct investments in real estate, loan money, or permit the lending, mortgage, or pledges.

Reporting Requirements
The Committee will be provided a report quarterly at the finance committee meeting.

Maximum Percentage Policies per Investment Fund

Investment Fund
Asset Class
Short-Term Reserves
Operating Reserves
Endowment/Strategic Reserves

Note: Investment Policy adopted by the Finance Committee April 15, 2000.