This Investment Policy Statement (“IPS”) details the oversight and management of the investment portfolio of The U.S. Olympic & Paralympic Endowment (“Endowment”) assets. This IPS addresses the following areas:
Mission
The United States Olympic & Paralympic Endowment, “Endowment”, was formed for the benefit of, and to carry out, the purposes of the United States Olympic & Paralympic Committee, “the USOPC”. The Endowment is organized under the laws of Colorado as a not-for-profit corporation. The Internal Revenue Service has determined the Endowment to be exempt from taxes under 501 (c)(3) of the Internal Revenue Code and to be a public charity under 509 (a)(3). Further, the Endowment and its agents intend to comply with the Colorado Prudent Investor Act and the Colorado Investment Advisors' Act.
The Endowment is expected to be a perpetual fund, dedicated to the oversight and management of an endowment. The Endowment will distribute from the fund substantial annual grants for the benefit of United States athletics and sports organizations. In addition, various member organizations of the USOPC have pooled certain of their assets, as principal, with those of the Endowment, which acts solely as agent for the investment of the USOPC member organization funds. These National Governing Bodies, “NGBs”, may withdraw funds at any time in support of their needs.
The control and management of the affairs of the Endowment and the disposition of the funds and property shall be vested in a ten-member Board of Directors. The Directors may appoint an Investment Committee who shall report to the Directors. The Endowment operates under its Bylaws and its restated Articles of Incorporation with amendments as of June 18, 2013.
Governance
The conduct and oversight of the Endowment’s investment program shall be the responsibility of the Investment Committee, as selected from time to time by the Board of Directors, in accordance with its Bylaws and functioning within such policies as the Board may establish.
The Investment Committee may establish such further policies and guidelines as it may deem appropriate and shall serve as the principal source of policy recommendations on investments and financial management to the Board of Directors.
The Investment Committee may, upon a recorded majority vote of its members, make temporary exceptions to these guidelines in unusual circumstances. The Chair of the Investment Committee will notify the Chair of the Board of any action taken as a temporary exception and will, if appropriate, make recommendations concerning an amendment to the investment policy guidelines to the full Board at its next meeting.
Investment Objective
The Endowment’s investment objective is to preserve its purchasing power, while providing a continuing and stable funding source to support Endowment programs. To accomplish this objective, the Endowment seeks to generate a total return that will exceed not only its operating expenses, but also all expenses associated with managing the fund and the eroding effects of inflation. It is the intention that all total return (interest income, dividends, realized gains, and unrealized gains), above and beyond the amount approved for expenditure or distribution, will be reinvested in the portfolio. The portfolio will be managed on a total return basis, consistent with the applicable standard of conduct set forth in the Uniform Prudent Management of Institutional Funds Act (UPMIFA), or any subsequent acts that may pertain to institutional investment management.
In order to achieve this investment objective, the Investment Committee will attempt to construct a diversified portfolio that does not expose the Endowment to undue levels of risk, such as manager concentration, complexity, excessive volatility as measured by standard deviation, liquidity, transparency, or other risks undefined. The Investment Committee will seek to control the costs of administering the Fund and managing the investments.
Asset Allocation
To achieve its investment objective, the Endowment will allocate among several asset classes with a bias toward equity and equity-like investments due to their higher long-term return expectations. Other asset classes may be added to the Fund to enhance returns, reduce volatility through diversification, and/or offer a broader investment opportunity set.
The long-term, strategic asset allocation is presented in Appendix A for the Long-Term and Reserve Pools. The Investment Committee may revise these targets periodically. If at any point the allocations fall outside of the allowable ranges defined in Appendix A, it may rebalance the portfolio to the degree necessary to bring all categories back within stated ranges. It does not necessarily need to rebalance fully back to target allocations if conditions warrant.
Portfolio Liquidity
The Endowment has a long-term investment horizon with relatively low liquidity needs. For these reasons, the portfolio can tolerate short- and intermediate-term volatility provided that long-term returns meet or exceed its investment objective. To ensure adequate liquidity for distributions and to facilitate rebalancing, the committee will conduct a periodic review of total fund liquidity.
Portfolio Monitoring
The Investment Committee, with assistance as needed, will periodically (quarterly at a minimum and monthly if necessary and available) review the performance of the portfolio and each of its underlying investment managers.
All performance measurements are to be viewed after the deduction of investment management fees (i.e. “Net of Fees”). Extensive benchmarking will be completed by the Investment Committee, with assistance as needed, at the total fund level, as well as at the individual manager level. To the extent that performance does not meet or exceed that of the benchmark, the Committee will determine whether or not corrective action is warranted. Corrective action may include, but is not limited to, a reduction in portfolio allocation, adjustment of mandate, or outright termination of the manager.
Representative benchmarks are presented in Appendix B.
Spending and Distribution Policy
The spending policy, derived from income, is a two-tier policy. The intention is to distribute 5% of the average market value of qualified assets for the past 12 quarters. The Endowment, when possible, would also like to distribute a minimum of $10 million on an annual basis in support of its mission. At its discretion, the Board may choose to make exceptions to the above policy.
Conflict of Interest
If any member of the committee, staff or outside advisor shall have, or appear to have, a conflict of interest that impairs or appears to impair the respective member’s ability to exercise independent and unbiased judgment in the good faith discharge of his or her duties, he or she shall disclose such conflicts prior to meaningful discussion. All parties must also comply with any other conflicts of interest policies adopted by the Endowment.
Periodic Review
In order to keep the IPS current, this information is subject to no less than annual review.
- Mission
- Governance
- Investment Objective
- Asset Allocation
- Portfolio Liquidity
- Portfolio Monitoring
- Spending and Distribution Policy
- Conflicts of Interest
- Periodic Review
Mission
The United States Olympic & Paralympic Endowment, “Endowment”, was formed for the benefit of, and to carry out, the purposes of the United States Olympic & Paralympic Committee, “the USOPC”. The Endowment is organized under the laws of Colorado as a not-for-profit corporation. The Internal Revenue Service has determined the Endowment to be exempt from taxes under 501 (c)(3) of the Internal Revenue Code and to be a public charity under 509 (a)(3). Further, the Endowment and its agents intend to comply with the Colorado Prudent Investor Act and the Colorado Investment Advisors' Act.
The Endowment is expected to be a perpetual fund, dedicated to the oversight and management of an endowment. The Endowment will distribute from the fund substantial annual grants for the benefit of United States athletics and sports organizations. In addition, various member organizations of the USOPC have pooled certain of their assets, as principal, with those of the Endowment, which acts solely as agent for the investment of the USOPC member organization funds. These National Governing Bodies, “NGBs”, may withdraw funds at any time in support of their needs.
The control and management of the affairs of the Endowment and the disposition of the funds and property shall be vested in a ten-member Board of Directors. The Directors may appoint an Investment Committee who shall report to the Directors. The Endowment operates under its Bylaws and its restated Articles of Incorporation with amendments as of June 18, 2013.
Governance
The conduct and oversight of the Endowment’s investment program shall be the responsibility of the Investment Committee, as selected from time to time by the Board of Directors, in accordance with its Bylaws and functioning within such policies as the Board may establish.
The Investment Committee may establish such further policies and guidelines as it may deem appropriate and shall serve as the principal source of policy recommendations on investments and financial management to the Board of Directors.
The Investment Committee may, upon a recorded majority vote of its members, make temporary exceptions to these guidelines in unusual circumstances. The Chair of the Investment Committee will notify the Chair of the Board of any action taken as a temporary exception and will, if appropriate, make recommendations concerning an amendment to the investment policy guidelines to the full Board at its next meeting.
Investment Objective
The Endowment’s investment objective is to preserve its purchasing power, while providing a continuing and stable funding source to support Endowment programs. To accomplish this objective, the Endowment seeks to generate a total return that will exceed not only its operating expenses, but also all expenses associated with managing the fund and the eroding effects of inflation. It is the intention that all total return (interest income, dividends, realized gains, and unrealized gains), above and beyond the amount approved for expenditure or distribution, will be reinvested in the portfolio. The portfolio will be managed on a total return basis, consistent with the applicable standard of conduct set forth in the Uniform Prudent Management of Institutional Funds Act (UPMIFA), or any subsequent acts that may pertain to institutional investment management.
In order to achieve this investment objective, the Investment Committee will attempt to construct a diversified portfolio that does not expose the Endowment to undue levels of risk, such as manager concentration, complexity, excessive volatility as measured by standard deviation, liquidity, transparency, or other risks undefined. The Investment Committee will seek to control the costs of administering the Fund and managing the investments.
Asset Allocation
To achieve its investment objective, the Endowment will allocate among several asset classes with a bias toward equity and equity-like investments due to their higher long-term return expectations. Other asset classes may be added to the Fund to enhance returns, reduce volatility through diversification, and/or offer a broader investment opportunity set.
The long-term, strategic asset allocation is presented in Appendix A for the Long-Term and Reserve Pools. The Investment Committee may revise these targets periodically. If at any point the allocations fall outside of the allowable ranges defined in Appendix A, it may rebalance the portfolio to the degree necessary to bring all categories back within stated ranges. It does not necessarily need to rebalance fully back to target allocations if conditions warrant.
Portfolio Liquidity
The Endowment has a long-term investment horizon with relatively low liquidity needs. For these reasons, the portfolio can tolerate short- and intermediate-term volatility provided that long-term returns meet or exceed its investment objective. To ensure adequate liquidity for distributions and to facilitate rebalancing, the committee will conduct a periodic review of total fund liquidity.
Portfolio Monitoring
The Investment Committee, with assistance as needed, will periodically (quarterly at a minimum and monthly if necessary and available) review the performance of the portfolio and each of its underlying investment managers.
All performance measurements are to be viewed after the deduction of investment management fees (i.e. “Net of Fees”). Extensive benchmarking will be completed by the Investment Committee, with assistance as needed, at the total fund level, as well as at the individual manager level. To the extent that performance does not meet or exceed that of the benchmark, the Committee will determine whether or not corrective action is warranted. Corrective action may include, but is not limited to, a reduction in portfolio allocation, adjustment of mandate, or outright termination of the manager.
Representative benchmarks are presented in Appendix B.
Spending and Distribution Policy
The spending policy, derived from income, is a two-tier policy. The intention is to distribute 5% of the average market value of qualified assets for the past 12 quarters. The Endowment, when possible, would also like to distribute a minimum of $10 million on an annual basis in support of its mission. At its discretion, the Board may choose to make exceptions to the above policy.
Conflict of Interest
If any member of the committee, staff or outside advisor shall have, or appear to have, a conflict of interest that impairs or appears to impair the respective member’s ability to exercise independent and unbiased judgment in the good faith discharge of his or her duties, he or she shall disclose such conflicts prior to meaningful discussion. All parties must also comply with any other conflicts of interest policies adopted by the Endowment.
Periodic Review
In order to keep the IPS current, this information is subject to no less than annual review.
Appendix A
ASSET ALLOCATION POLICY TARGETS AND RANGES
Long-Term Pool
Asset Class |
Target |
Lower - Upper Bounds |
Global Public Equity |
45% |
30% - 60% |
Flexible Capital (hedge funds) |
15% |
5% - 25% |
Private Equity |
20% |
0% - 25% |
Real Assets |
10% |
5% - 15% |
Fixed Income |
8% |
5% - 15% |
Cash |
2% |
0% - 5% |
Total |
100% |
100% |
Reserve Pool
Asset Class |
Target |
Lower - Upper Bounds |
Fixed Income |
80% |
60% - 100% |
Cash |
20% |
0% - 40% |
Total |
100% |
100% |
Appendix B
REPRESENTATIVE BENCHMARKS
Long-Term Pool
Asset Class |
Benchmark |
Total Fund |
|
Global Public Equity |
MSCI AC World Index |
Flexible Capital (hedge funds) |
HFRI FOF Composite Index |
Private Equality |
ALL PE Index (Cambridge, Thompson's, or similar) |
Real Assets |
Real Asset Composite Index (components may include NAREIT, Blbg Barclays U.S. TIPS, and other private benchmarks) |
Fixed Income |
Blbg Barclays U.S. Aggregate Index |
Cash |
FTSE 3 Month T-Bill |
Manager-specific benchmarks are used in all analysis and reporting, and may include benchmarks such as the S&P 500 Index, Russell 3000, MSCI, EAFE, etc.