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University Policy Library

Office of General Counsel
Administration 208
University of Central Missouri
P.O. Box 800
Warrensburg MO 64093
Phone: 660-543-4730

Investment Policy
Board of Governors Policy 4.1.020
Approved by the Board of Governors on February 21, 2001

I. Purpose

The Board of Governors of the University of Central Missouri is authorized through the statewide mission to establish institutional policies, which would include the investment of university funds. The responsibility for the day-to-day administration of this policy has been assigned by the UCM Board of Governors to the treasurer and those persons he/she shall designate to have the authority for investing UCM's funds.

II. Policy

A. Ethics and Conflict of Interest. Personnel involved in the investment process shall refrain from personal business activity that could create an appearance of impropriety or could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Employees and investment officials shall disclose to the Board of Governors any material financial interest in financial institutions that conduct business within Missouri, and they shall further disclose any large personal/investment positions that could be related to the performance of the UCM portfolio.

B. Investment Objectives. UCM's primary objectives for the investment portfolio are to preserve university monies, to meet liquidity needs and to derive a competitive yield. The investments will be structured to meet the daily cash requirements of UCM and to enhance the revenues to projects and to the operations of UCM. Central Missouri may seek to enhance total portfolio return by means of active portfolio management, including investment trading in response to changes in market value or market rates of return. Because of UCM's objective for the preservation of monies, speculative investments in order to attain gains or profits through unusual risk are prohibited.

C. Portfolio Performance. The portfolio should produce book yields of at least the 12-month average rate on one-year Treasury notes. For management purposes, the total rate of return will be calculated for the portfolio and compared to the equivalent average for a 91-day Treasury bill, a one-year and five-year Treasury note.

D. Investment Bidding and Broker/Dealer Requirements. Any purchase or sale of an investment will follow a competitive bid process. The competitive bid shall be initiated by the treasurer's office as to the amount to be invested and the terms and conditions of the bid, such as maturity and any investment restrictions. The evaluation of the bids received from approved financial institutions will be conducted by the treasurer's office and will be awarded based on the highest rate yield to UCM. Security dealers and financial institutions requesting the opportunity to bid on UCM's investments shall be subjected to an appropriate review by the staff of the treasurer's office. The review shall include, among other things, an analysis of the firm's financial statements and the background of the sale representative. Criteria used to select dealers will include:

  1. Exempt Bank / Registered NASD Broker / Dealer

  2. Financial strength and capital adequacy of firm

  3. Services provided by firm

  4. Research services available

  5. Resume, reputation and qualifications of sale representative

  6. Due diligence of firm reference

  7. University investment experience

E. Investment Guidelines. To attain UCM's primary investment objectives, purchases will be limited to any of the following securities:

  1. Certificates of Deposit

    1. Certificates of deposits may be acquired from any financial institution providing federal deposit insurance. Certificates of deposit in excess of $100,000 shall be collateralized in accordance with Missouri statutes. All depositories must have a signed depository agreement with UCM.

    2. A financial institution will be eligible to receive total deposits in an amount not to exceed their equity capital.

  2. U.S. Treasury and Federal Agency Securities, to include:

    1. U.S. Government

    2. U.S. Government Agency securities and U.S. Government guaranteed securities, including but not limited to all direct obligations of the:

      1. U.S. Government

      2. Federal Farm Credit Banks

      3. Federal Home Loan Banks

      4. Federal National Mortgage Association

      5. Federal Home Loan Mortgage Corporation

      6. Resolution Funding Corporation

      7. Student Loan Marketing Association

      8. GNMA

  3. Repurchase Agreements

    1. Repurchase agreements may be entered into for periods of 180 days or less.

    2. Repurchase agreements must be purchased through approved broker/dealers.

    3. All collateral will be delivered to an approved third party custodian.

    4. Repurchase agreements must be collateralized 101 percent with United States Treasury bills, bonds or notes. The market value of the collateral will be computed and reviewed at least weekly by the staff of the treasurer to determine collateral adequacy.

  4. Corporate Bonds

    Investment grade bonds, requiring a rating of A or better by Standard & Poor's Ratings Group or Moody's Investors Services.

F. Portfolio Guidelines. The University of Central Missouri’s investment portfolio shall have the following guideline allocation restrictions:

  1. No restriction on direct obligations of the U.S. Government, U.S. Government Agency issues, or U.S. Government guaranteed securities.

  2. No restriction for repurchase agreements which are fully collateralized.

  3. A maximum of 25 percent of the portfolio may be held in corporate bonds, with no more than five percent of the portfolio to be held with any one issuer. The ratio of the portfolio comprised of corporate bonds will be reviewed on an annual basis.

G. Safekeeping and Custody. All securities may be held by a broker / dealer, financial institution, or the custodian designated by the treasurer, and in all cases evidenced with safekeeping receipts.

H. Internal Controls. The treasurer will establish a system of internal controls designed to prevent losses of public funds arising from fraud, employee error, and misrepresentation by third parties, or imprudent actions by employees of the office of the treasurer. The controls deemed most important shall include: separation of duties (which includes initiation of transactions, custody of assets and record keeping; and documented approval by the treasurer or his/her designee of all sales and purchases of investments), custodial safekeeping; clear delegation of authority to transact purchases or transfer cash; written confirmation of transactions; and documentation of transaction strategies. Additional procedures may be implemented to ensure that internal controls are always maintained.

I. Reporting. The staff of the treasurer shall report monthly to the treasurer and the Board of Governors on the present status of the investment portfolio. The investment report shall provide weighted average maturities and yields, and the market valuation of the investment portfolio. In August, an annual report of investment activities and performance will be presented to the president and the Board of Governors.

Approved by the Board of Regents on October 17, 1984
Approved by the Board of Governors on February 21, 2001
Formatting updated August 1, 2007