The Georgia Tech Research Corporation and the Georgia Tech Applied Research Corporation are setting forth this Investment Policy (“Policy”) to establish the framework within which the Corporations’ investment activities will be conducted. The majority of funds held by GTRC and GTARC are payable to the Georgia Institute of Technology for research costs and overhead. GTRC and GTARC also hold funds in excess of the cost plus overhead due to Georgia Tech each month. These funds are managed by GTRC and GTARC to provide support for the research and educational missions of the Institute. The Policy provides for minimal risk and maximum return to maintain principal and ensure liquidity. It is also the intention of this Policy to increase funds available for the support of Georgia Tech research by investing excess funds held by the Corporations.
GTRC and GTARC shall manage funds held by the Corporations to protect principal and maintain the availability of the funds while earning interest at current market norms.
Introduction: In establishing this Policy the Board recognizes the traditional relationship between risk and returns and acknowledges that all investments, whether for one day or years, involve a variety of risks related to maturity, credit, market and other factors. Additionally, some investments involve intermediaries (counter-parties) whose performance (or failure to perform) may affect the value or liquidity of the underlying investment.
When choosing between alternative investments, staff should structure the portfolio based on an understanding of the variety of risks and the basic principle of diversification imposed by this Policy on the structure of the portfolio.
This Investment Policy, the actions of the staff and Third Party Managers will be guided by the standard care expected of a “Prudent Person”. The Prudent Person Rule states that Investments should be made with judgment and care, under the circumstances then prevailing. Which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income from the investment.
Scope: The Investment Policy shall apply to all the funds held by the Georgia Tech Research Corporation and the Georgia Tech Applied Research Corporation. To the extent that excess funds held by GTRC and GTARC are the result of advance payments from the United States government, such funds are subject to the requirements of Office of Management and Budget (OMB) Circular A-110. Funds held for payment to Georgia Tech are subject to the requirements of the Board of Regents of the University System of Georgia. Stock, warrants, options and similar equity interests received by Georgia Tech as consideration or partial consideration for the license of intellectual property by the Office of Technology Licensing pursuant to Georgia Tech’s Intellectual Property Policy (Faculty Handbook Section 50) is not considered an investment under this Policy and is excluded from coverage hereunder.
For the avoidance of doubt: Georgia Tech Research Corporation and Georgia Tech Applied Research Corporation maintain separate accounts and separate investments. Funds held by the Corporations are not comingled.
Audit Committee: The Audit Committee shall recommend Guidelines for GTRC and GTARC Investments that are consistent with the objectives below. The Audit Committee shall also review the Guidelines at least annually along with investment activity reported to the Board of Trustees in the Quarterly Treasurer’s Report to assess investment risk as follows:
- Credit risk
- Concentration of credit risk
- Custodial credit risk
- Interest rate risk
- Liquidity risk
The Audit Committee may recommend changes to the Guidelines for GTRC and GTARC Investments to the Board at any time.
Objectives: The objectives of this Investment Policy are, in order of priority, to ensure the safety of capital and to maintain the liquidity of funds. The safety of capital is ensured by establishing minimally credit ratings is higher than Grade BBB for investment instruments which may include commercial paper, limiting the portfolio duration and the duration of individual holdings, setting limits on exposure of funds by market sector, requiring a minimum investment in a basket of securities either fully guaranteed by the U.S. Government or issued by an Agency or Instrumentality of the U.S. Government, and requiring third party managers to verify compliance with their investment parameters and this Investment Policy. To provide liquidity, to fund operating expenses, and to provide for unanticipated expenditures, funds will be invested in securities which are traded in a reasonably liquid market.