Investment Policy

Investment Policy

This policy applies to the investment of all operating funds of Mid-Ohio Psychological Services, Inc.  The purpose of this policy is to establish guidelines for the prudent investment of the agency’s assets.  In the process of identifying the investment strategies to be used, these guidelines provide stability in the management of the portfolio.  This policy driven approach reduces the Board’s and investment manager’s propensity to act impulsively during volatile markets.  The policy furthermore provides parameters for the portfolio by providing guidelines for selecting appropriate investments and classes of assets.  It is recognized that from time to time the Board of Directors’ attitudes, expectations, and objectives may change.  Therefore, this policy statement is intended to be used as a guideline rather than a rigid statement of policy from which there can be no deviation.  The specific purpose of the following policy, which is to be reviewed annually by the board of directors of the agency, is to:

  • Establish the investment objectives, policies, guidelines, and eligible securities relating to any investment owned or controlled by the agency.
  • Identify the criteria against which the investment performance will be measured.
  • Communicate the objectives of the Board, staff, investment managers, brokers, and funding sources that may have involvement.
  • Serve as a review document to guide ongoing oversight of the management of the agency’s investments.

The Board’s investment philosophy is to exercise ordinary business care and prudence in its investment of agency assets considering the long and short-term needs of the agency in carrying out its purposes, its present and anticipated financial requirements, expected total return on its investments, price level trends, and general economic conditions.  The agency recognizes that the uncertainty of future events, volatility of investment assets, and the potential loss in purchasing power are present to some degree with all types of investments.  While high levels of risk are to be avoided, the assumption of a moderate level risk is warranted and encouraged in order to allow the opportunity to achieve satisfactory results consistent with the objectives and investment philosophy of the agency.  Modern Portfolio Theory will form the basis of investment philosophy.  Correlations of asset classes will be applied to reduce risk when possible and remain consistent with the portfolio’s investment goal.  Future variations may occur as new asset classes become available or as the investment advisor makes moderate adjustments.


Responsibility for Management of Funds

All funds of the agency shall be managed by the board of directors.  At the discretion of the board, an external agent or agencies may be engaged to manage funds of the agency; in which case, the external manager(s) shall be responsible directly to the board of directors.

External Management of Funds

Investment through external programs, facilities, and professionals operating in a manner consistent with this policy will constitute compliance.

The duties and responsibilities of each investment manager appointed to manage the agency’s assets are:

  1. Managing the assets in accordance with the policy guidelines and objectives expressed herein, or expressed in a separate written agreement when deviation is deemed prudent and desirable.
  2. Exercising complete investment discretion within the guidelines and objectives expressed herein.  Such discretion includes decisions to buy, hold, or sell securities in amounts or proportions reflective of the manager’s current investment strategy and compatible with the objectives of the agency.
  3. Promptly informing the Financial Coordinator and Executive Director regarding all significant matters pertaining to the investment of the assets.  The Board of Directors should be kept apprised of major changes in investment strategy, portfolio structure, market value and other matters affecting the investment of assets.
  4. Managers shall periodically distribute all ordinary income earned in their respective portfolio.

Semi-annually, the Financial Coordinator and Executive Director will review each manager’s performance and adherence with the guidelines set forth in this document and report to the Board of Directors.  Reviews will include:

  1. Market and total fund returns
  2. Total portfolio volatility
  3. Individual manager returns vs. indices, benchmarks and universes
  4. Adherence to mission related guidelines and objectives
  5. Asset allocation and spending policy
  6. The continuing appropriateness of this document

Investment Objectives

General Objectives.
Assets of the agency shall be invested in a manner consistent with the exercise of ordinary care and prudence under the facts and circumstances prevailing at the time of the investment action or decision.
Assets of the agency should be invested in a manner consistent with the fiduciary standards and prudent investment standards as forth in the Third Restatement of the Law:  Trusts (Prudent Investor Rule) (1992), directed that the prudent man, acting in a similar capacity familiar with such matters, would use an investment of like character with like aims and with due considerations given to the tax exempt status of the agency.
All transactions must be undertaken for the sole interest of the agency’s portfolio and its beneficiaries.
The assets must be invested with the safeguards to which a prudent person would adhere.
Investments shall be diversified so as to minimize the risk of large losses unless under the circumstances it is clearly prudent not to do so.

Broad Objectives:
Preservation of capital with the potential for capital growth that is moderate risk.
Over all time periods, achieving the highest possible return commensurate with the level of risk assumed.
To achieve the highest rates of return feasible within the risk parameters established by the policy.

Investment Goals
The agency seeks to achieve as much income as possible, consistent with preservation of capital while considering the potential for capital appreciation.  In recognition of this investment goal, the agency desires a portfolio of investments having moderate relative

Risk Measures
Risk measures will be incorporated in the form of standard deviation and initial acceptable levels will be limited by comparison with the standard deviation inherent in the S&P 500 Index and Shearson Lehman Government Bond Index on a blended level 60/40 respectively.
Time Horizon – For the portfolio, evaluation and performance measures will be set to a 6 to 10 year period that is necessary to encompass at least one full market cycle.

Financial Guidelines

The Board of Directors believes that the agency’s assets should be managed in a manner that reflects the following statements.

Asset Allocation.
All MOPS assets should be allocated as follows: