Investment Guidelines

 

Conventional Assets

The guidelines for conventional assets (i.e., equities and bonds) should be set manager-by-manager, based on the envisaged role of that manager in the portfolio. The guidelines should be structured so as to allow the manager sufficient latitude for the Endowment to benefit from the manager’s investment style, taking into account its contribution to risk at the total portfolio or total asset class level, both in absolute terms and relative to the benchmarks. Appropriate limits will be specified in the Supplemental Investment Guidelines provided to the manager. Equity and fixed income managers may invest in cash equivalent vehicles as a means for the temporary (less than one year) deployment of funds.

Alternative Strategies

The Portfolio may employ investment managers, funds, or “funds of funds”, to pursue investments in “alternative assets” for the purpose of diversifying the market exposure of the portfolio and/or to enhance potential returns. These might include, without limitation, managers or partnerships investing in marketable alternative strategies, private equity, venture capital, natural resources, commodities, real estate or other asset classes with a low correlation to traditional equity and fixed income securities. These investments may not fall within the guidelines for the more traditional asset classes, but should be consistent with the specific objectives and guidelines established for the relevant asset class / manager.

Cash Equivalent Investments

Equity and fixed income managers may invest in cash equivalent vehicles as a means for the temporary (less than one year) deployment of funds. In addition, the Endowment may at times hold cash directly for strategic or tactical reasons. Appropriate cash equivalent investments are defined as high quality, short duration securities primarily denominated in US dollars/Saudi Arabian Riyal.

Opportunistic Strategies

Endowment may actively adopt certain tactical asset allocation techniques in an effort to capitalize on situations in the marketplace or to manage risk more effectively. These techniques may be implemented through overweighting or underweighting the allocation to an asset class, using overlay strategies, or through common hedging techniques. In addition, active management techniques may be employed by external managers in an attempt to outperform their benchmarks.

From time to time, the Board may choose to implement a tactical allocation or invest in “opportunistic strategies” to take advantage of attractive valuations based on market pricing inefficiencies and/or other perceived market anomalies. Tactical, unconventional and/or opportunistic investments may involve higher degrees of risk, less transparency, illiquidity or other issues, offering the potential for higher returns with commensurately higher risk.