Investment Policy

 

The Endowment fund supports the operational and capital needs of various research, educational, and student life programs at KFUPM. Endowment plans to establish and sustain that support through Sharia-compliant investment strategies set to maintain the purchasing power of the endowment and ideally grow the endowment without putting the principal value of these funds at imprudent risk.


The Statement of Investment Objectives and Policy Guidelines is developed to assist KFUPM Endowment in carrying out its fiduciary responsibilities of conserving and increasing the body of its assets and build a sizable investment portfolio that enhances future regular spending needs of the Endowment. To this end, this statement of objectives will:

  • Establish Endowment’s financial and investment objectives,
  • Address the spending and liquidity needs of the fund, recognizing the desire to protect the assets from inflationary erosion and to build a sizable investment base. The expected inflation rate for higher education institutions is 4% a year.
  • Briefly outline the investment-related responsibilities of KFUPM Endowment board of directors, and the investment advisor(s) retained to manage the assets of the investment portfolio.
  • Establish formal, yet flexible, investment guidelines incorporating prudent asset allocation and realistic total return goals within acceptable levels of risk.
  • Provide a framework for regular constructive communication between KFUPM Endowment and all parties with responsibility for portfolio investments.
  • Create standards of investment performance which are historically achievable and by which the manager agrees to be measured.

Investment Objectives

The three key financial objectives of the Endowment, in order of priority, are as follows:

  • To support the mission of endowment by providing the adequate distributions for spending.
  • To avoid capital erosion of the Endowment and maintain its purchasing power.
  • To grow the value of the Endowment in real terms.

Investment Guidelines

The Endowment has the responsibility to assure that the funds are being used prudently and that they can continue to support the Endowment activities in perpetuity.


To this end, The Endowment has established the following investment guidelines:

  • Assets will be managed so as to protect the investment portfolio from inflationary erosion. While it is understood that there will be occasional declines in fund value, the total investment fund is expected to achieve a positive return over a five-year or greater time period.
  • The portfolio will be evaluated on a total return basis relative to the primary investment objectives.
  • Portfolio performance should be consistent with assumed risk.
  • The investment policy for the fund will conform to Islamic Sharia standards and will not allow investment in any prohibited or religiously doubtful asset or asset class.
  • The investment policy for the fund will conform to all governmental regulations pertaining to the investment of such assets of any of the managers.

Detailed investment guildlines can he found here.