States of Jersey Investment Strategies (December 2016)

STATES OF JERSEY

STATES OF JERSEY INVESTMENT STRATEGIES (DECEMBER 2016)

Presented to the States on 13th December 2016 by the Minister for Treasury and Resources

STATES GREFFE

2016  R.131

REPORT

INVESTMENT STRATEGIES – INTRODUCTION

1. INTRODUCTION

1. This strategy document is presented in accordance with the terms of the Public Finances (Jersey) Law 2005 (Article 6) ("the Finance Law"), and the Public Finances  (Transitional  Provisions)  (No. 2)  (Jersey)  Regulations  2005 (Regulation 4), which require that the Minister for Treasury and Resources presents his investment strategies for States Funds.
2. The States agreed the Establishment of a States of Jersey – Common Investment Fund in P.35/2010, approved by the States on 11th May 2010. Under this arrangement,  the  majority  of  States  Funds  will  be  pooled  for  investment purposes.
3. Each States Fund will maintain its own investment strategy, which it may achieve  by  investing  in  the  States of Jersey –  Common  Investment  Fund investment pools.
4. This report outlines the investment strategies for each of the States of Jersey – Common Investment Fund's investment pools. It also outlines the individual investment strategies for each specific States fund.
5. The strategies reflect the Minister's long-term investment aims for each fund. The current position of each  fund reflects current market conditions. The Minister's intention is that each fund will move towards its strategic aim as investment opportunities and market conditions allow.

2. OVERARCHING STRATEGIES

1. The Minister for Treasury and Resources has adopted an ethical investment strategy that will be applied to all States' investments; this is included in Appendix 1.
2. Governance arrangements are detailed inAppendix 2.
   3. THE STATES' MAJOR FUNDS

3.1  The States' major funds' investment strategies are summarised in the table below. Full details of each investment strategy are available in Appendices 4 to 11.

1. Monies required for working balances will be held outside of the States of Jersey – Common Investment Fund.
2. The Consolidated Fund is to hold the cash deemed to be required to fund expenditure in the medium term in the Long-Term Cash Pool of the CIF or operating cash account outside the CIF, this balance is marked as ' in the table above. The remaining holdings of the Consolidated Fund are classified as investable assets' and invested in line with the strategy above.

4. PENSION FUNDS

1. The 2 major pension funds, Public Employees Contributory Retirement Scheme ("PECRS") and Teachers' Superannuation Fund ("JTSF") investment strategies are summarised in the table below. Full details of each investment strategy are available in the attached Appendices.
2. The Minister for Treasury and Resources approves these strategies based on recommendations from the Management Board ("JTSF") or Committee of Management ("PECRS"). The Management Board/Committee of Management are responsible for these Funds; they take independent professional investment advice and guidance from appropriately qualified and experienced persons on the  investment  strategies  for  the  Funds.  When  approving  the  investment strategies, the Minister takes appropriate investment advice from the States' Investment Adviser.

1. This figure includes capital value of future payments for certain liabilities.
2. Asset allocation is based on assets in the current Fund, and excludes the value of future contributions to be made in respect of liabilities for increases to pensions in payment.

5. SPECIAL FUNDS

5.1  The Special Funds' investment strategies are summarised in the table below. Full  details  of  each  investment  strategy  are  available  in  the  attached Appendices.

1. Monies required for working balances will be held outside of the  States of Jersey – Common Investment Fund.
2. The loan book will be held outside of the States of Jersey – Common Investment Fund.

6. TRUST AND BEQUEST FUNDS

6.1  The Trust and Bequest Funds' investment strategies are summarised in the table below. Full details of each investment strategy are available in the attached Appendices.

1. These Funds have an allocation of 65% to growth like assets, which includes equities and Jersey property; the split is determined byJPH.
2. The holding in Jersey Water will be held outside of the States of Jersey – Common Investment Fund.

7. OTHER FUNDS

7.1  The Other Funds' investment strategies are summarised in the table below. Full details of each investment strategy are available in the attached Appendices.

8. STATES OF JERSEY – COMMON INVESTMENT FUND

1. The States of Jersey – Common Investment Fund currently operates a number of investment pools (see attached Appendices for full details of each investment strategy for each pool). States Funds can participate in any of the pools in accordance with their investment strategies. The investment pools currently available are as follows –

• Active U.K. Equities Pool
• Active Global Equities Pool
• Active Emerging Market Equity Pool
• Passive Global Equity Pool
• Special Fund Equity Pool
• U.K. Corporate Bonds Pool
• Absolute Return Bond Pool
• U.K. Index-Linked Gilts Pool
• Short-Term Gilts Pool
• Long-Term Cash and Cash Equivalents Pool
• U.K. Pooled Property Pools
• Hedge Fund Pool
• Local Infrastructure Investments Pool.

2. It is anticipated that further pools will be created for alternative investment asset classes. The main types of alternative investments are commodities, hedge funds, private equity, real estate, derivatives and infrastructure investments.
3. Over time, further special and trust and bequest funds may join and invest through  the  Fund;  investment  strategies  for  these  funds  will  be  added accordingly. Existing investment strategies will continue to be reviewed and revised on an ongoing basis to reflect any changes made.

9. TYPES OF ALTERNATIVE INVESTMENTS

1. Alternative investments are an alternative asset class compared to "traditional" types of investments which States' Funds can invest in. Examples of traditional investments are equities, bonds and cash and cash equivalents.

2. Factors  to  consider  when  investing  in  new  alternative  asset  classes  are investment  risk  versus  return;  additional  diversification  of  the  Fund's investment to manage risk profile, and liquidity of the new asset class and the Fund's overall liquidity.
3. There are numerous types of alternative investments; however, the main types which some of the States' Funds could possibly invest in, in line with their investment strategies, could include the following examples –

• commodities
• hedge funds
• private equity
• real estate
• managed funds
• derivatives
• infrastructure investments.

4. Definitions for each of the above types of alternative assets are as follows:
5. Commodities – these are any inputs in the production of other goods or services (e.g. oil, gold, steel, intangible rights). It is believed that they can act as a hedge against unexpected inflation in the economy over a longer period of time (5 years). Commodities generally achieve higher expected returns than bonds.
6. Hedge funds – these privately managed funds are allowed by regulators to invest  in  more  investment  types  (stocks,  bonds,  commodities,  currencies) through more tools than ordinary funds. Hedge funds incorporate investment strategies aimed at securing positive returns on investments, regardless of the overall market performance. They can combine both long and short positions, use gearing, enter into high-concentration positions, invest in illiquid assets and trade derivatives.
7. There are opportunities to invest in fund of funds – this is where a fund's primary activity is investing in other hedge funds. This can be a way of reducing the specific risk associated with investing with a single manager, and achieving greater diversification.
8. An allocation of hedge funds can be made through investing in one or a combination of the following –

• a multi-strategy fund of hedge funds
• a single-strategy fund of hedge funds
• a single-manager fund.

9. Private equity – this involves providing capital to unquoted companies in return for a share of the company's profits. There are numerous sub-classifications of private equity, but they can be broadly classified as early stage venture capital; expansion/development capital; and management buy-outs/buy-ins.

Capital can either be provided directly, or by investing in a private equity fund or fund of funds.

10. Typically, institutional investors will utilise the fund of funds approach, which tends to be a long-term investment with a substantial "lock-in" period.
11. Real estate – Examples of real estate investments (property) are land, office buildings,  retail  shopping  centres,  multi-family  housing,  and  industrial warehouse properties. The most common type is income-producing real estate. Large income-producing real estate properties are commonly purchased by high-net-worth individuals and institutions, such as life insurance companies, real estate investment trusts ("REITs") and pension funds.
12. There are 2 main types of REITs –

• Equity REITs – these invest mainly in actual real estate properties, such as office buildings, apartment complexes, warehouses and shopping centres. Equity REITs are usually not highly leveraged.
• Mortgage REITs – these invest mainly in mortgages and construction loans for commercial properties, and tend to use leverage to a greater degree than equity REITs.

13. One of the main differences between investing in real estate, as compared to stocks or bonds, is that real estate is an investment in the "bricks and mortar" of a building and the land it is built upon, therefore it is highly tangible. Real estate is an asset class that offers protection against inflation, as well as potential tax benefits. However, lack of both liquidity and diversification are drawbacks to investing directly in real estate.
14. Managed funds – these are like mutual funds (pooled funds) but are allowed long or short positions in commodity and currency futures contracts,  and options in such contacts. There are 4 main types of managed funds – unit trusts, group investment funds, superannuation funds and insurance bonds.
15. Derivatives – these are traded contracts (e.g. future contracts, convertible bonds or stocks) securities or financial instruments whose values derive from values of transitional investments (e.g. stocks or assets such as gold).
16. Infrastructure investments – Infrastructure investment covers a broad range of investment types, but typically involves taking an ownership interest in an infrastructure business (commonly defined as providing an essential service to the  community).  Most  infrastructure  assets  are  either  bought  from  a government, a private equity firm, or are part of a listed company that is sold off. This is a long-term investment option providing higher returns than the Long-Term Cash Pool, while generating positive externalities for the Island.
17. Infrastructure investments can be split into  2 main categories, economic or social, examples as follows –

APPENDICES CONTENTS PAGE

OVERARCHING INVESTMENT POLICIES

ETHICAL INVESTMENT STRATEGY

1. The Minister for Treasury and Resources is mindful of ethical issues and recognises the importance of acting in an ethically responsible manner when managing investments on behalf of the States of Jersey.

1. Fund Managers' investment decisions

Although  the  States  does  not  directly  intervene  in  the  activities  of  the investment  managers,  its  ethical  framework  is  implemented  through appointment  of  investment  managers  and  the  mandate  under  which  these managers act. During the appointment process, due consideration is given to the managers' approach to Environmental, Social and Governance ("ESG") risk

2. When making investment decisions, fund managers, for which the Minister is responsible, are required, where relevant, to give consideration to risks in their assessment  of  value.  Through  this  process,  managers  are  expected  to incorporate  the  potential  risk  and  value  impact  of  ESG  factors  in  their investment decisions, having regard to the information that is readily available at the time of the decision. The Minister intends for this to encourage investment in companies with good governance and responsible management.

GOVERNANCE ARRANGEMENTS (relates to all except pension funds)

2. The Minister is responsible for the development of investment strategy for States' invested funds: these strategies are outlined in this document. In line with the requirement of the Law, as soon as practicable after the Minister has prepared the investment strategy, or any review of it, the Minister must present it to the States

1. The Treasurer is responsible for ensuring that any investments so made are properly  managed,  controlled  and  accounted  for  in  accordance  with  the investment strategy or review of it.
2. To achieve  this,  the  Treasurer  is  empowered  to  appoint  any  investment managers required by virtue of the investment strategy; and may appoint such other  suitably  qualified  and  experienced  investment  managers,  custodians, agents,  investment  advisers  and  other  persons  as  the  Treasurer  considers necessary or convenient to enact the investment strategy.
3. The Treasury Advisory Panel is established to provide advice to the Minister and Treasurer on discharging their responsibilities and exercising relevant powers. To this end, they are granted the right to seek and be provided with the necessary  information  and  have  the  right  to  request  professional  advice necessary to fulfil their duty.
4. Investment advice

It is expected that an Independent Investment Adviser will be appointed to provide advice to the Treasury Advisory Panel, but also to the Treasurer and Minister.

5. Appointment of investment managers

Where appropriate, independent investment managers are to be appointed to manage the assets of investing funds in order to comply with their respective investment strategy. These Managers are appointed by the Minister/Treasurer, but are expected to be scrutinised and recommended by the Treasury Advisory Panel,  who  will  oversee  a  rigorous  selection  process  supported  by  the Independent Investment Adviser.

6. Performance monitoring

Performance  of  managers  is  monitored  against  their  specific  performance target. The performance of managers against these targets is assessed formally by the Treasury Advisory Panel, who meet at least quarterly. As well as monitoring by the Treasury Advisory Panel, performance is reviewed by the Treasury, and Managers are under constant review by the appointed Investment Adviser, both of whom will report by exception to the Treasury Advisory Panel on identification of any significant issues.

7. Investment managers are subject to challenge by the Treasury Advisory Panel, who periodically require managers to present on performance and adherence to their mandate. Managers would be expected to explain any under-performance against target, together with investment managers' plans to return to target.
8. Reporting

The Minister will report on the performance of both the Common Investment Fund  and  the  States'  main  funds  in  the  Annual  Accounts.  The  Treasury Advisory Panel shall produce a report, at least annually, addressed to the Minister, to describe the performance and position of the States' Investment Portfolio.

9. Independent custodians

In  order  to  safeguard  States'  interests  and  assets  and  to  mitigate  risks, independent custodians are appointed to provide safekeeping for all assets, except  direct  property  and  policies  of  assurance,  directly  invested  by  the investment managers.

10. Operational movements from strategy

At times it may be necessary for funds to move away from the strategic allocation detailed within their investment strategy for operational reasons. An example of this would be the removal of an investment manager who has been downgraded by the Investment Adviser, necessitating the liquidation of that manager's assets with little notice. In this case, assets would be held in existing asset classes on a temporary basis until a new manager could be appointed.

11. These movements will not be deemed a breach of Strategy, but a timetable for replacement of the manager in order to facilitate movement back to within strategic ranges must be tabled with the Treasury Advisory Panel as soon as is administratively feasible.

STATES OF JERSEY MAJOR FUNDS

These strategies relate to the largest States of Jersey Funds separately constituted under Jersey law. Each Fund is included in the Annex to the States' financial accounts, where further details of the annual performance and investment portfolio constituents as at the year-end can be found.

STRATEGIC RESERVE FUND INVESTMENT STRATEGY

1. Purpose of the Fund

1. On 5th December 2006, the States approved P.133/2006 and thereby confirmed the policy for the Strategic Reserve as –
2. "the Strategic Reserve is a permanent reserve, where the capital value is to be used in exceptional circumstances to insulate the Island's economy from severe structural decline such as the sudden collapse of a major Island industry or from major natural disaster."
3. On 5th December 2013, the  States  approved  P.122/2013: this  proposition defined the Fund balance of £651,216,000 as at 31st December 2012 as the capital value of the Fund and that, for future  years,  the  capital value  be maintained in real terms by increasing the capital value in line with increases in Jersey RPI(Y).
4. The States had also previously approved P.84/2009, on 6th November 2009, which proposed that the policy is varied to enable the Strategic Reserve to be used, if necessary, for the purposes of providing funding of up to £100 million for a Bank Depositors Compensation Scheme.
5. On 8th October 2015, the States approved P.76/2015, which proposed that the Minister for Treasury and Resources is requested to bring forward proposals for the use of income earned on the Strategic Reserve above that required to maintain the capital value.
6. The clarification of the purpose of the Fund by the States enables greater emphasis to be given to increasing the longer-term value of the Fund rather than the need to generate annual income.  This has enabled an increase in the proportion of the Fund being allocated to return-seeking assets from previous levels, but considerable emphasis still needs to be given to capital preservation and liquidity.

2. Strategy

1. In order to meet the purpose of this Fund, the Minister has set a strategic aim of investing 60% in return-seeking assets (equities and alternative investment class) and 40% in risk-reducing assets, as detailed in the following table –

Strategic Aim  Range

% %

Equities  50  40–60 Bonds  40  25–45 Cash  –  0–10 Alternative Investments Class  10  0–25

2. Alternative assets may include allocations to the property or hedge funds. Due to the reduced liquidity of these asset classes, short-term movements away from strategic  allocations  are  permissible,  either  due  to  market  movements  or transitionally as positions are built. In these cases, assets may be held in other existing asset classes.
3. The Strategic Reserve is under strategic review: an allocation of £100 million to hedge funds has been recommended by the Treasury Advisory Panel as a transitional measure to meet the desired objective of reducing exposure to equity,  while  maintaining  allocations  to  growth  assets.  This  will  increase allocation to alternatives above 10%, but all other asset classes are expected to remain in line with the existing strategic ranges of the Fund.
4. Specific cash limits, such as concentration limits or credit-rating limits, are to be dealt with at the level of the investment pool.
5. Other asset class-specific limits, such as concentration limits, leverage limits or country limits, will be dealt with at the level of the investment pool.

3. Investment structure

3.1  The Fund can carry out its investments through the Common Investment Fund.

4. Investment in Jersey

4.1  Investment is not generally made in Jersey, or in Jersey-quoted companies. This is to ensure that, as far as possible, the assets are diversified away from the effects of the Jersey economy.

STABILISATION FUND INVESTMENT STRATEGY

1. Purpose of the Fund

1. The purpose of this Fund is to provide a reserve which can be used to make Jersey's fiscal policy more counter-cyclical, in order to create a more stable economic environment. The Fund receives cash allocations in more buoyant economic conditions and makes payments at times of anticipated economic downturn.
2. It is intended to use the remainder of the Fund's balance in the short term, therefore  the  strategy  for  the  Fund  is  to  hold  monies  in  cash  and  cash equivalents.
3. The investment strategy is to be revisited once transfers to rebuild the Fund value have taken place.

2. Strategy

1. In order to meet the purpose of this Fund, the long-term aim of the Fund is to invest within the parameters indicated below –

2. Specific cash limits, such as concentration limits or credit-rating limits, are to be dealt with at the level of the investment pool.
3. Other asset class-specific limits, such as concentration limits, leverage limits or country limits, will be dealt with at the level of the investment pool.

3. Investment structure

3.1  The Fund can carry out its investments through the Common Investment Fund.

SOCIAL SECURITY (RESERVE) FUND INVESTMENT STRATEGY

1. Purpose of the Fund

1. The  Social  Security  (Reserve)  Fund  (the  "Reserve  Fund")  is  both  the mechanism by which contribution rates and ceiling changes which fund pension and benefit costs of the Social Security Fund are smoothed over time, and effectively act as a buffer to contribute towards the rising burden of pension costs as the Island faces up to the pressures arising from an ageing population. The Minister for Treasury and Resources is responsible for the investment of the Fund's assets. The Minister for Social Security has responsibility for the development of a strategy to deal with meeting future pension provisions for eligible Islanders.
2. The number of persons in receipt of a State pension as a percentage of the working population is expected to increase over time. The purpose of this Fund is to build up a reserve for the future provision of pension benefits for those currently in employment, so as to reduce the impact of pensions on future generations, as well as to smooth contributions for social security benefits over time.
3. Long-term growth is one of the main aims for the Social Security (Reserve) Fund, and therefore any income generated is re-invested back into the Fund. It is expected that there will be no requirement to draw on the assets of the Fund in the near term, and during this period there will continue to be net cash inflows to the Fund.

2. Strategy

1. In order to ensure that the Fund can work towards its objective of longer-term growth, its strategy is to place a high proportion of its assets in return-seeking investments.
2. The longer-term strategic aim for the Fund is to invest within the parameters indicated below –

3. As the Reserve Fund is subject to 3-yearly actuarial reviews, the outcomes may result in a need to redefine the Fund's investment strategy. All strategy revisions will be brought to the attention of the States.
4. Alternative assets may include allocations to the Property Pool or Hedge Fund Pool. Due to the reduced liquidity of these asset classes, short-term movements away  from  strategic  allocations  are  permissible,  either  due  to  market movements or transitionally as positions are built. In these cases, assets may be held in other existing asset classes.
5. Specific cash limits, such as concentration limits or credit-rating limits, are to be dealt with at the level of the investment pool.
6. Other asset class-specific limits, such as concentration limits, leverage limits or country limits, will be dealt with at the level of the investment pool.

3. Investment structure

3.1  The Fund can carry out its investments through the Common Investment Fund.

4. Investment in Jersey

4.1  Investments are not made in Jersey, except where a Jersey company is part of an established index. This is to ensure that, as far as possible, the assets are diversified away from the effects of Jersey's economy.

HEALTH INSURANCE FUND INVESTMENT STRATEGY

1. Purpose of the Fund

1. The Health Insurance Fund is established under the Health Insurance (Jersey) Law 1967. The Fund receives allocations from Social Security Contributions, as specified under Article 30 of the Social Security (Jersey) Law 1974, for the use of paying all claims for money benefit (G.P. subsidy) and pharmaceutical benefit. The Minister for Social Security has responsibility for the control and management of the Fund.
2. The Minister for Treasury and Resources is responsible for the investment of the  Fund's  assets.  The  Minister  for  Treasury  and  Resources  may,  after consultation  with  the  Minister  for  Social  Security,  appoint  one  or  more investment managers for the Fund.

2. Strategy

1. In order to meet the Fund's purpose, the strategy set is a mix between capital growth  and  income  distribution.  The  Minister  has  set  a  strategic  aim  of investing 40% in return-seeking assets (equities) to produce long-term returns,

with the remainder, 60%, in risk-reducing assets to provide some stability, and in the case of corporate bonds, income returns.

2. The longer-term strategic aim for the Fund is to invest within the parameters indicated below –

3. The ranges indicate tolerable variations according to investment conditions at any time.
4. Specific cash limits, such as concentration limits or credit-rating limits, are to be dealt with at the level of the investment pool.
5. Other asset class-specific limits, such as concentration limits, leverage limits or country limits, will be dealt with at the level of the investment pool.

3. Investment structure

3.1  The Fund can carry out its investments through the Common Investment Fund.

CONSOLIDATED FUND INVESTMENT STRATEGY

1. Purpose of the Fund

1. The Consolidated Fund is established under the Public Finances (Jersey) Law 2005 and effectively represents the States' current account, were it a household. Income from taxation, duties, chargeable services, fees and fines are paid in, and expenditure approved by the States Assembly, on employees' salaries, equipment, supplies, services and capital projects, etc. are paid out from the Consolidated Fund.
2. The investment strategy of the Fund is split between the assets expected to be called upon in the short term, the operational portfolio', and assets which can be invested on a longer-term basis, the long-term portfolio'.

2. Strategy

Operational portfolio

1. Liquidity and security is the primary concern for the operational portfolio, monies which are expected to be called upon in the immediate future to fund day-to-day expenditure will be maintained in accounts outside the CIF which can deal daily. Assets expected to be called upon in the short term, but are unlikely to be required to fund monthly expenditure, may be invested in the Long-Term Cash Pool of the CIF in order to earn a superior return.

2. The Fund's holdings which are expected to be required for daily cash-flow transactions will be held outside the CIF with an investment manager who specialises in investing in cash and near-cash equivalent investments.
3. Investment  limits  are  dealt  with  primarily  at  the  pool  level  of  the  CIF. Mandates' conditions outside the CIF may allow for greater liquidity, reflecting the operational nature of external holdings, but should not be less stringent, in relation to concentration or credit-rating limits, relative to the CIF Long-Term Cash Pool.

Long-Term portfolio

4. The long-term portfolio is not expected to be called upon to fund operational requirements in the short term, and follows a balanced strategy. This strategy seeks to generate a real return, but within strict risk limits in order to protect the capital value of the portfolio.
5. The strategy for this portfolio has a longer-term investment horizon than the operational  portfolio,  allowing  for  the  investment  in  growth  and  income- producing assets. Relative to the operational portfolio, the asset allocation includes assets which may be more volatile in the short run, but are expected to generate greater returns in the long run. The strategy offers a balance of returns from both income and growth, but with a bias towards the latter, with the allocation to bonds serving to achieve the Fund's capital preservation objective. In addition, the balanced approach reduces the concentration risk of being overly exposed to any single asset class.

Strategic Aim  Range

% %

Stock Market assets

Equities  45  40–55 Bonds  45  40–55

Non-Stock Market assets

Alternative Investments Class  10  n/a

6. The ranges for Stock Market assets only indicate tolerable variations according to investment conditions at any time. Due to the practicalities of alternative investment, it is not appropriate to manage these within a small control range.
7. As  the  financial  environment  changes,  the  composition  of  the  Fund's investments will change to reflect a move towards the strategic aim of the Fund.
8. The alternative investment class includes a range of pools as detailed within the Common Investment Fund section of this document. Further alternative class pools are expected to be included as opportunities are identified; this document will be updated and presented to the States whenever such pools are added. Until the full anticipated range of alternative pools are operational, monies allocated to alternatives, not invested in the current range of alternative pools, will be invested in existing asset classes.

9. Specific cash limits, such as concentration limits or credit-rating limits, are to be dealt with at the level of the investment pool.
10. Other asset class-specific limits, such as concentration limits, leverage limits or country limits, will be dealt with at the level of the investment pool.

3. Investment structure

3.1  The Fund can carry out its investments through the Common Investment Fund.

CURRENCY NOTES AND COINS FUNDS INVESTMENT STRATEGIES

1. Purpose of the Fund
   2. The States' Currency and Coinage Funds are provided for under the Public Finances (Jersey) Law 2005 and the Currency Notes (Jersey) Law 1959. The principal purpose of these Funds is to hold assets that match the value of Jersey currency in circulation, such that the holder of Jersey currency could on request be repaid.

2. Strategy

1. In order to meet the purpose of the Funds, the strategy is based mainly on the requirement to invest in low-risk cash-based assets to protect and maintain the capital value of the investments, and to ensure that currency and coinage in circulation is matched, and that investments could be liquidated fairly quickly should a need arise.
2. In order to maximise the potential return to the Funds, a relatively small element of the Fund should be held in Equities and Short-Term Government Bonds.
3. Operational cash represents the maximum expected short-term fluctuation in the  currency in circulation which  may be  called  upon by the  banks, and therefore is not deemed to be available for investment purposes.
4. The long-term strategic aims of the Funds, for the investable balance (i.e. non- operating stock of cash), are to invest in the parameters indicated below. In addition, a further cash buffer is held to provide against volatility of currency in circulation –

Strategic Aim  Range Asset Class  %  % Equities  20  18–22 Bonds  10  9–11 Cash  10  9–11

Non-Stock Market assets

Alternative Investments Class  60  N/A

5. The ranges for Stock Market assets only indicate tolerable variations according to investment conditions at any time. Due to the practicalities of Alternative Investments, it is not appropriate to manage these within a small control range.

6. Allocation to the alternative investment class is subject to the availability of projects and so is necessarily fluid. Monies allocated to the alternative class, which cannot be invested due to lack of appropriate available projects, will be invested in existing asset classes.
7. The Fund may invest in Jersey infrastructure investments as a part of its alternative asset class, using various instruments to carry out the investment. It is further anticipated that these investments provide returns in excess of cash, be  a  viable  investment  option  and  offer  investment  diversification.  Its investment may take place directly or via the local infrastructure investment pool.
8. Specific cash limits, such as concentration limits or credit-rating limits, are to be dealt with at the level of the investment pool.
9. Other asset class-specific limits, such as concentration limits, leverage limits or country limits, will be dealt with at the level of the investment pool.

3. Investment structure

3.1  The Funds may carry out their investments through the Common Investment Fund.

HOUSING DEVELOPMENT FUND INVESTMENT STRATEGIES

1. Purpose of the Fund

1.1  On 22nd June 1999, the States approved P.84/1999 and created the Housing Development Fund in order to –

"help meet the requirements for the development of social rented and first-time  buyer  homes  as  identified  in  the  Planning  for  Homes Report.".

On 16th May 2013, P.33/2013 enabled the Housing Department to become incorporated into a wholly States-owned Housing Company. The key objective of the Housing Company is construction of new housing and completion of improvement works to ensure that the housing stock meets the requirements of the Decent Homes Standard within 10 years.

In June 2014, the States of Jersey leveraged its strong balance sheet to issue a £250 million bond with a 40-year maturity, at superior low rates of interest relative to borrowing, which could be achieved by the Housing Company.

The proceeds of the Bond issuance are to be placed in the Housing Development Fund and loaned to the Housing Company or equivalent facilitating agency to fund construction and improvement works, in line with the defined purpose of the Fund.

The drawdowns and repayments shall be made in accordance with underlying loan/investment agreements in accordance with the construction/renovation timetable. Interest will be paid on the loans/investments into the Fund in accordance with the underlying agreements. The recipient will fund required

capital repayments  and interest from returns  generated from the new and refurbished properties that the loan will fund.

2. Strategy

1. The Investment Strategy of the Housing Development Fund is subject to a rolling quarterly re-assessment process, in line with the recommendations of the States of Jersey Investment Adviser, as published on page 99 of the Draft Budget Statement 2015. Consequently, under advice from the States of Jersey Investment Adviser, the Fund is permitted to periodically crystallise gains made on asset classes, or make strategic allocations which can result in short-term movements away from published strategy.
2. The strategy of the Fund seeks to protect the capital value of the Fund, which will be required to repay the issued bond on maturity. The Fund will also seek to generate sufficient returns, taking into account receipt of interest from the loans to the Housing Company, to meet Bond Coupon payments.
3. Reflecting the planned rapid drawdown of the Fund's assets to make planned loans to the Housing Company, a fluidity to the investment strategy is necessary to react to liquidity requirements and market conditions. Unlike longer-term funds, the Housing Development Fund is granted the ability to move away from its strategic aims under advice of the Treasury Advisory Panel or Investment Adviser. In accordance with these conditions, a strategic range is not included, as the Fund will be reviewed at the quarterly meeting of the Treasury Advisory Panel, rather than being automatically rebalanced.
4. The Fund's strategic aims are detailed below; though as highlighted above, the rapid drawdown to fund planned loans to the Housing Company means that asset allocations cannot be rigidly applied and rebalanced. The allocations are therefore a conceptual aim for the average Fund balance over the drawdown period; actual positioning will be reviewed quarterly.

Strategic Aim %

Cash  50 Absolute Return Bonds  25 Alternatives  25

5. Property, hedge funds and local infrastructure investment are considered part of the alternative asset class. These classes may suffer from liquidity constraints which prevent immediate rebalancing and movement to the strategic range. Consequently,  short-term  allocations  to  this  class  may  fall  outside  the prescribed range, as positions are built or sold down. In cases where positions are being built, allocations to this class will be held in existing asset classes until they can be fully allocated.
6. Specific cash limits, such as concentration limits or credit-rating limits, are to be dealt with at the level of the investment pool.
7. Other asset class-specific limits, such as concentration limits, leverage limits or country limits, will be dealt with at the level of the investment pool.

3. Investment structure

3.1  The Fund can carry out its investments through the Common Investment Fund.

4. Investment in Jersey

4.1  Investment is not generally made in Jersey, or in Jersey-quoted companies. This is to ensure that, as far as possible, the assets are diversified away from the effects of the Jersey economy.

PENSION FUNDS AND THEIR INVESTMENT STRATEGIES

1. Background

1. The  Minister  for  Treasury  and  Resources  approves  strategy  based  on recommendations  from  the  relevant  Board  or  Committee  of  Management responsible  for  the  individual  pension  fund.  In  approving  the  relevant investment strategy, the Minister takes appropriate investment advice from the States Investment Adviser.
   2. Governance arrangements

1. Investment Advice

1. The  Management  Committee/Board  responsible  for  these  Funds  takes independent professional investment advice and guidance from appropriately qualified and experienced persons on the strategy to be followed.
   2. Appointment of fund managers

2.2.1  Independent investment managers are appointed to manage the various assets of the pension funds. These managers are appointed by the Committee/Board following  a  selection  process  and  after  receiving  independent  advice  and guidance. The appointment of managers needs ratification from the Minister for Treasury and Resources.

3. Performance monitoring

2.3.1  As with those funds which fall under the Minister's direct responsibility, the appointment of advisers and managers and their performance for pension funds is regularly assessed by individual Investment Sub-Committees, set up by the Pension Funds Management Committee/Board.

4. Independent custodians

2.4.1  In order to safeguard the pension funds' interests and assets and to mitigate risks, independent custodians are appointed to provide safekeeping for all those assets which are directly invested by the investment managers.

PUBLIC EMPLOYEES CONTRIBUTORY RETIREMENT SCHEME ("PECRS")

1. Purpose of the Fund

1. PECRS is the States' pension scheme set up to meet retirement benefits of all contributing public sector employees (excluding teachers) over 20 years of age.
2. Investment issues are considered by the Scheme's Investment Sub-Committee under advice from an Independent Investment Adviser, and recommendations are made to the Committee of Management for endorsement and/or referral to the Minister for Treasury and Resources as appropriate.

2. Strategy

1. The aim of the investment strategy is to invest the  assets of the Scheme prudently to ensure that the benefits promised to members are provided.

2. The current strategy followed is –

3. Any requirement for rebalancing between the asset classes is reviewed on a quarterly basis with advice from the Scheme's Investment Adviser.
4. The States has recognised responsibility for the pre-1987 Debt for PECRS, which  it  has  agreed  to  repay  over  an  82-year  period.  This  represents approximately 15% of PECRS' total assets (referred to as "Debt" in the table above), and these payments can be regarded like a salary-related index-linked gilt issued by the States.

JERSEY TEACHERS' SUPERANNUATION FUND ("JTSF")

1. Purpose of the Fund

1. Membership  of  the  JTSF  is  compulsory  for  all  teachers  in  full-time employment, and optional for those who work part-time.
2. The Fund receives pension contributions from working teaching staff and also from the Education Department.

2. Strategy

1. The strategy for the Fund is based on the Board's aim to invest the assets of the Scheme prudently to ensure that the benefits promised to members are provided.
2. The long-term strategy is  to hold one-third of the assets in risk-reducing categories (e.g. bonds and property) and two-thirds in return-seeking assets (e.g. equities). Tactical moves diverging away from this strategic distribution may occur according to prevailing market conditions and prospective returns from each asset class.

3. The table below illustrates the long-term asset allocation strategy –

4. The above strategy is applied to the assets which are currently invested in the JTSF and does not take account of the future contributions which will be received to cover increases to pensions in payments which have been recently added to the scheme liabilities. The current Investment Strategy therefore contains a higher level of return-seeking assets than may otherwise be the case.
5. Any rebalancing between the asset classes is carried out on a quarterly basis on advice from the Scheme's Investment Adviser.

3. Investment structure

3.1  The JTSF can carry out their investments through the Common Investment Fund.

SPECIAL FUNDS

The States has a number of special funds set up for specific purposes. Funds falling into this category include the Tourism Development Fund, Channel Islands Lottery (Jersey) Fund and the Dwelling-Houses Loan Fund.

TOURISM DEVELOPMENT FUND ("TDF") INVESTMENT STRATEGY

1. Purpose of the Fund

The TDF was established by proposition P.170/2001, lodged au Greffe by the former Tourism Committee (now the Minister for Economic Development, Tourism, Sport and Culture) entitled – Investing in Tourism's future'. The proposition was adopted by the States on 18th December 2001.

1. The purpose of the proposition was for the Tourism Development Fund to replace the old Tourism Investment Fund ("TIF"). The aim and objectives of the Fund are as follows –
2. Aim – "to stimulate investment in tourism infrastructure in order to improve Jersey's competitiveness and sustain a flourishing tourism industry as a second pillar of the economy."
3. Fund's  objectives:  "(1) improve  quality  of  visitor  experience;  (2) enhance distinctiveness  and  environmental  quality;  (3) improve  cost-efficiency  and focused  use  of  resources;  and  (4) secure  implementation  of  the  tourism strategy."

2. Investment strategy

1. The strategy reflects the Minister's long-term investment aim for this Fund, with the intention to move towards the Fund's strategic aim as investment opportunities and market conditions allow. Initially, it is anticipated that assets will continue to be invested in the Consolidated Fund in the form of cash balances and short-term instruments, such as Certificates of Deposits.
2. In order to meet the Fund's purpose, the investment strategy set is to maintain the monetary value of the Fund, excluding investment income, to provide a high level of security and a good level of liquidity to finance projects as required.
3. It is recommended that the annual cash requirement for tourism projects is considered, and that any surplus cash balances identified as not required in the current year should be invested to maximise the investment returns for the Fund. Only  cash  clearly  identified  as  surplus  to  annual  requirements  should  be invested; it will otherwise be maintained within the Consolidated Fund as a proportion of that Fund.
4. The longer-term strategy for the Fund  is to hold assets in cash and cash equivalents. Therefore, the Minister has set a strategic aim of investing all monies in risk-reducing assets, as detailed in the following table –

5. The intention is that this Fund, apart from any monies required as a working balance, will be able to participate in the Common Investment Fund. Initially, assets will be held in the Consolidated Fund in the form of cash balances and short-term instruments, such as Certificates of Deposits.
6. Specific cash limits, such as concentration limits or credit-rating limits, are to be dealt with at the level of the investment pool.
7. Other asset class-specific limits, such as concentration limits, leverage limits or country limits, will be dealt with at the level of the investment pool.
8. No off-balance-sheet vehicles are permitted.

3. Investment structure

3.1  The Fund can carry out its investments through the Common Investment Fund.

CHANNEL ISLANDS LOTTERY (JERSEY) FUND INVESTMENT STRATEGY

1. Purpose of the Fund

1. The Channel Islands Lottery is one of the longest-running small lotteries in the world. It began in Jersey in the mid-1960s and raised millions of pounds for the development of Fort Regent. In 1975, Jersey and Guernsey joined together to form the Channel Islands Lottery, and have been successful in raising money for sport, leisure and recreation in the Islands and supporting the Association of Jersey  Charities,  which  is  made  up  of  approximately  245 charities  (as  at February 2010).
2. The  Gambling  (Channel  Islands  Lottery)  (Jersey)  Regulations  1975 ("the Lottery Regulations") were made under Article 3 of the Gambling (Jersey) Law 1964 ("the 1964 Law"), setting out the Fund's constitution, operations and administration provisions. The 1964 Law was repealed and replaced by the Gambling (Jersey) Law 2012 ("the 2012 Law"), but the Lottery Regulations were continued in force under Article 27 of the 2012 Law, and are still in force.
3. The promotion of the lottery is carried out by the Minister for Economic Development,  Tourism,  Sport  and  Culture,  jointly  with  the  Guernsey Committee ("States of Guernsey Gambling Control Committee").
4. The Minister for Economic Development, Tourism, Sport and Culture has powers  to  set  aside  reserves  to  exercise  his  or  her  functions  under  the Regulations. On 18th November 2009, proposition P.155/2009 was adopted by the States, to retain 10% of the 2009/10 profits in order to boost the Fund's reserves as a contingency measure, prior to distributing the Lottery's profits.

2. Investment strategy

1. During the year, monthly trading cash receipts from sales of tickets after deduction of prize monies continue to grow. Historically, by December, the Fund holds substantial cash balances due to compounding monthly ticket net inflows and large ticket sales from the Christmas Charity Draw.
2. Each year in March/April, a substantial payment is made to the Association of Jersey Charities, which coincides with the presentation of the previous year's annual accounts to the States.
3. In order to meet the Fund's purpose, the investment strategy's emphasis is on security, maintenance of capital value, flexibility and a very high level of liquidity, rather than on investment growth.
4. The long-term investment strategy is to hold all assets in cash and short-term instruments, such as Certificates of Deposits. As many of the significant cash- flows occur annually, some of the cash may be invested on a longer-term basis (i.e. greater than 3 months).
5. The intention is that this Fund, apart from any cash balances required as working balances, will be able to participate in the Common Investment Fund.
6. Specific cash limits, such as concentration limits or credit-rating limits, are to be dealt with at the level of the investment pool.
7. Other asset class-specific limits, such as concentration limits, leverage limits or country limits, will be dealt with at the level of the investment pool.
8. No off-balance-sheet vehicles are permitted.

3. Investment structure

3.1  The Fund can carry out its investments through the Common Investment Fund.

DWELLING-HOUSES LOAN FUND INVESTMENT STRATEGY

1. Purpose of the Fund

1. The  Building  Loans  (Jersey)  Law  1950  ("the  Law"),  under  Article 2, established the "Dwelling-Houses Loan Fund" for the following purpose –
2. " to establish a building loans scheme to enable residentially qualified first- time buyers, who have never owned residential freehold property in Jersey, to purchase their first home. They must be able to demonstrate they have a deposit and can meet the loan repayments.".

2. Investment strategy

1. In order to meet the Fund's purpose, the investment strategy set is to maintain security and a high level of liquidity so as to provide lending when required; ensuring that the asset value of the Fund is only subject to small fluctuations.

2. The strategy is designed to maintain the asset value of the Fund in monetary, rather than real terms, and any income received will help to offset the effects of inflation on monetary values.
3. The long-term investment strategy for the Fund is to hold assets (excluding the loan book) in cash and cash equivalents and short-dated government bonds.
4. The short-term cash holding at any one time should be sufficient to cover potential loans to be issued in the forthcoming year. Therefore the Minister has set a strategic aim of investing all monies in risk-reducing assets, as detailed below –

5. Specific cash limits, such as concentration limits or credit-rating limits, are to be dealt with at the level of the investment pool.
6. Other asset class-specific limits, such as concentration limits, leverage limits or country limits, will be dealt with at the level of the investment pool.
7. No off-balance-sheet vehicles are permitted.

3. Investment structure

3.1  The Fund can carry out its longer-term investments through the Common Investment Fund.

ECOLOGY FUND INVESTMENT STRATEGY

1. Purpose of the Fund

1. The Ecology Fund was established on 26th March 1991 by the States of Jersey (under P.32/1991) with a sum of money received as an insurance settlement from the Amoco Cadiz oil tanker disaster of 1978, with the following purpose, as detailed in the proposition –
2. " the interest from the investment of which would be available for use by the trustees to grant aid, wholly or partially, for any activity designed to promote or protect the environment or ecology of Jersey".
3. The Fund rules and administrative structure were laid out in P.32/1991 by the former Finance and Economics Committee (now the Minister for Treasury and Resources).
4. On 29th September 2005, the States approved amendments to the Fund rules, under P.192/2005, impacting the future management of the Ecology Fund, presentation of annual reports to the States, and the process for the appointment of Trustees.

5. The Fund is managed by Trustees; under P.192/2005, the Chairman of the Trustees should be a member of the States, and on the recommendation of the Planning and Environment Committee (now the Minister for the Environment), there should be 5 trustees appointed by the States.

2. Investment strategy

1. While  P.32/1991  gives  the  Treasurer  of  the  States  the  responsibility  for investing the capital of the Fund, the 2 propositions provide no guidance as to how the investments of the Fund should be carried out. Therefore the Public Finances (Transitional Provisions) (No. 2) (Jersey) Regulations 2005 apply, whereby  the  Minister  for  Treasury  and  Resources  is  responsible  for  the development of the Fund's investment strategy, in consultation with the States' Investment Adviser (Regulation 3), as he sees fit.
2. In order to meet the Fund's purpose, the investment strategy set is for half of the Fund's assets to work towards an objective of maintaining, with a target to exceeding, the real value of the Fund over a rolling 5-year period; and for the remainder of the Fund's assets to provide sufficiently high levels of income for distribution.
3. It is assumed that, provided the required distribution income is generated, the Trustees will accept some price volatility in their assets in the pursuit of longer- term investment returns.
4. The  strategy  assumes  that  the  distributions  will  be  paid  from  investment income, and that in the long term there will be no requirement to have a separate strategic aim for the holding of cash.
5. Therefore the Minister has set a strategic aim of investing 60% in return-seeking assets (equities and alternative investments class), and 40% in risk-reducing assets, as detailed below –

Strategic Aim  Range

% %

Stock Market assets

Equities  50  45–55 Bonds  40  36–44 Cash  –  0–3

Non-Stock Market assets

Alternative Investments Class  10  N/A

6. The ranges for Stock Market assets only indicate tolerable variations according to investment conditions at any time. Due to the practicalities of Alternative Investments, it is not appropriate to manage these within a small control range.
7. Investigations are currently being carried out into the selection of appropriate alternative investment classes, while being conscious that the Fund achieves the desired levels of returns within the agreed risk profile.

8. The alternative investment class includes a range of pools as detailed within the Common Investment Fund section of this document. Further alternative class pools are expected to be included as opportunities are identified; this document will be updated and presented to the States whenever such pools are added. Until the full anticipated range of alternative pools are operational, monies allocated to alternatives, not invested in the current range of alternative pools, will be invested in existing asset classes.
9. Specific cash limits, such as concentration limits or credit-rating limits, are to be dealt with at the level of the investment pool.
10. Other asset class-specific limits, such as concentration limits, leverage limits or country limits, will be dealt with at the level of the investment pool.
11. No off-balance-sheet vehicles are permitted.

3. Investment structure

3.1  The Fund can carry out its longer-term investments through the Common Investment Fund.

LONG-TERM CARE FUND STRATEGY

1. Purpose of the Fund

1. Established under the Long-Term Care (Jersey) Law 2012, the Long-Term Care Fund is a ring-fenced fund administered by the Social Security Department, funded by the Long-Term Care charge payable by local residents and a grant from the States. The Fund pays benefits to adults with long-term care needs.
2. From 1st July 2014, individuals with long-term care needs have been able to claim benefits from the new long-term care scheme. The value of the benefit depends on the assessed care level of the individual and where the care is being received. Claimants can receive care in their own home, in a specialist group home, or in a residential home. A means-tested benefit is available from the start of the care for those with lower income and assets. Property loans are available which are secured against the value of the family home. Once standard care costs have reached a certain level, all claimants are entitled to a benefit which covers their standard care costs.
3. The portion of the Funds' assets not expected to be utilised in the short-term future is to be maintained within the investment portfolio.

2. Investment strategy

1. The current estimated future cash requirements of the Fund are subject to a high degree  of  uncertainty,  reflecting  both  the  short  history  of  operation  and uncertain levels of drawdown. The level of drawdown and repayment into the Fund is dependent on several factors, including long-term demographic and economic trends; these have been modelled, but assumptions may be subject to amendment.

2. In order to meet the Fund's purpose, the investment strategy is set to focus on capital preservation and liquidity reflecting the uncertain timing of future cash- flows.  The  Strategy  will  be  revisited  when  further  information  becomes available.
3. The strategy is designed to maintain the asset value of the Fund in monetary, rather than real terms, and re-investment of any income received will help to offset the effects of inflation on monetary values.
4. Although  Social  Security  maintain  an  operational  portfolio  outside  the investment portfolio, the short-term cash holding at any one time should be sufficient to cover potential drawdowns required to meet any operation shortfall required for the day-to-day operation of the Fund.
5. Therefore the Minister has set a strategic aim of investing 50% in cash/short- dated gilts providing a low-risk but low-return profile, complimented by a 50% allocation to absolute-return bonds. This class has an absolute-return focus, and aims to add value in rising and falling markets with low volatility.

6. Specific cash limits, such as concentration limits or credit-rating limits, are to be dealt with at the level of the investment pool.
7. Other asset class-specific limits, such as concentration limits, leverage limits or country limits, will be dealt with a the level of the investment pool.
8. No off-balance-sheet vehicles are permitted.

3. Investment structure

3.1  The Fund can carry out its investments through the Common Investment Fund.

TRUST AND BEQUEST FUNDS

1. Purpose of the Funds

1. These are Funds which have been left to the States of Jersey as a legacy or bequest to be used for the purpose specified by the benefactor.
   2. Introduction

1. This strategy document is presented in accordance with the terms of Article 6 of  the  Public  Finances  (Jersey)  Law  2005 ("the  Finance  Law"),  and Regulation 4 of the Public Finances (Transitional Provisions) (No. 2) Jersey Regulations 2005, which require that the Minister for Treasury and Resources presents his investment strategies for States Funds.
2. The  strategy  set  by  the  Minister  pays  particular  regard  to  the  need  for diversification in both the management of the money available and the level of funds to be invested.
3. For trust and bequest funds, the Minister recognises the responsibility to protect the interests of both present and future beneficiaries of the Fund when deciding on the investment strategy for the Fund, focusing on investments which are expected to give optimal performance in terms of their overall return, rather than on investments which will give the "right" balance between capital and income returns.
4. The Treasurer of the States is responsible for ensuring that States investments are properly managed, controlled and accounted for in accordance with the relevant investment strategies.
5. This document provides details on – (a) investment strategy for the Fund; and
   2. the States of Jersey – Common Investment Fund.
6. The strategy reflects the Minister's long-term investment aim for this Fund with the  intention  to move  towards  the  Fund's  strategic  aim  as  investment opportunities and market conditions allow.
7. The strategy for this Fund has been developed with reference to the U.K. Charity Commission's "statement of recommended practice" (SORP 2005) and other U.K. Charity Commission publications.
8. The  report includes  information  on  matters  solely  relating  to  this  Fund's strategy. This information is for this specific purpose only and should not be used for any other purpose.

3. Strategy

1. Many of these Funds have been left with the intention that they will be spent, and therefore unallocated funds need to be held in liquid assets. This means that the strategy for these types of Funds is to hold these assets in cash balances.
2. Larger States Funds which are more significant in value have their own tailored investment strategies. The intention is that many of these larger Funds will be able to participate in the Common Investment Fund in order to carry out their strategic aims. Issued investment strategies for these Funds are detailed on the following pages.

ESTATE OF A.A. RAYNER FUND INVESTMENT STRATEGY

1. Purpose of the Fund

1. The late Mrs. Ann Alice Blason, née Colclough (wife of Charles Henry Blason and the widow of John Edward Rayner, the late Lord Mayor of Liverpool), bequeathed assets to the States of Jersey for specific purposes, as detailed within her Will dated 30th October 1945.
2. The acceptance of the bequest by the States and resolution on how the Fund was to be administered was expressed in R&O.2536, which was adopted by the States on 16th November 1949.
3. In 2001 the States approved amendments to the objects of the Fund (P.38/2001 dated 27th March 2001, lodged by the Finance and Economics Committee (now the Minister for Treasury and Resources)), as the view was that the initial objectives of the Fund had been overtaken by time and events. The revised objectives are as follows –
4. "(1) the provision of pecuniary relief to needy persons residing in Jersey; and
   2. such other objectives or purposes of a charitable or philanthropic nature as the States may hereafter in their absolute discretion determine."
5. P.38/2001 also made amendments to the administration of the Fund, thus rescinding R&O.2536 and a later Act dated 11th September 1979. Under P.38/2001, the Fund's income is now administered by a Delegation which consists of 4 Jurats of Jersey's Royal Court.
6. The Minister for Treasury and Resources (formerly the Finance and Economics Committee) is responsible for any changes to the investment of the Fund after consultation with the Delegation.
7. Day-to-day administration and accounting is the responsibility of the Treasury and Resources Department.
8. The Will bequeathed the income of the Fund to be used for its objectives, and further  gave  the  States  discretion  to  distribute  capital  to  an  amount  not exceeding one half of the total capital of the Fund. In practice, all bequests historically have only been made out of the income of the Fund.

2. Investment strategy

1. P.38/2001 gives the Minister for Treasury and Resources (formerly the Finance and Economics Committee) responsibility for any changes to the investments of the Fund after consultation with the Delegation. It further provides the opportunity to invest in immovable property situated in or outside the Island, which will be held by the States of Jersey for and on behalf of the Fund.
2. In order to meet the Fund's purpose, the strategy set is to work towards its objective of maintaining, with a target to exceeding, the real value of the Fund over a rolling 5-year period, coupled with generating sufficient levels of income for distribution.

3. The  strategy  assumes  that  the  distributions  will  be  paid  from  investment income, and that in the long term there will be no requirement to have a separate strategic aim for the holding of cash.
4. Therefore the Minister has set a strategic aim of investing 75% in return-seeking assets (equities and alternative investments class), and 25% in risk-reducing assets, as detailed below –

Strategic Aim  Range

% %

Stock Market assets

Equities  65  58–72 Bonds  25  22–28 Cash  –  0–3

Non-Stock Market assets

Alternative Investments Class  10  N/A

5. The ranges for Stock Market assets only indicate tolerable variations according to investment conditions at any time. Due to the practicalities of alternative investments, it is not appropriate to manage these within a small control range.
6. Investigations are currently being carried out into the selection of appropriate alternative investment classes, while being conscious that the Fund achieves the desired levels of returns within the agreed risk profile.
7. The alternative investment class includes a range of pools as detailed within the Common Investment Fund section of this document. Further alternative class pools are expected to be included as opportunities are identified; this document will be updated and presented to the States whenever such pools are added. Until the full anticipated range of alternative pools are operational, monies allocated to alternatives, not invested in the current range of alternative pools, will be invested in existing asset classes.
8. Specific cash limits, such as concentration limits or credit-rating limits, are to be dealt with at the level of the investment pool.
9. Other asset class-specific limits, such as concentration limits, leverage limits or country limits, will be dealt with at the level of the investment pool.
10. No off-balance-sheet vehicles are permitted.

3. Investment structure

3.1  The Fund can carry out its investments through the Common Investment Fund.

THE RIVINGTON TRAVELLING SCHOLARSHIP INVESTMENT STRATEGY

1. Purpose of the Fund

1. The late Mr. William Charles Richmond-Pickering ("testator") bequeathed the remainder of his estate to establish "The Rivington Travelling Scholarship" for the following purposes, as detailed within his Will dated 17th April 1980 –
2. " to enable a person, male or female, of any age, to visit such museums or art galleries out of the Island as would further his or her appreciation of arts, crafts and/or history. The only other criteria of the award to be the sincerity of the applicants intention and lack of funds.".
3. The Will provided that in the event that the States did not accept the legacy on the terms set out by the testator, the residue of his estate would be given to the Société Jersiaise.
4. The acceptance of the bequest by the States was expressed in proposition P.117/2004 lodged au Greffe on 22nd June 2004 by the Education, Sport and Culture Committee (now the Minister for Economic Development, Tourism, Sport and Culture), and adopted by the States on 20th July 2004.
5. The administration of the Fund is carried out by a delegation of 3 persons: one person nominated by the Minister for Economic Development, Tourism, Sport and Culture; one person representing the Jersey Arts Trust; and one person representing the Jersey Heritage Trust. Executive and secretarial support is provided by officers of the Department for Economic Development, Tourism, Sport and Culture.
6. The Will makes no differentiation as to whether distributions should be made out of the capital or income of the Fund. However, the delegation, at their inaugural meeting, decided to allow grants only to be made out of the annual income of the Fund in order to preserve the capital of the Fund.

2. Investment strategy

1. The Will provides no guidance as to how the investments of the Fund should be carried out, therefore the Public Finances (Transitional Provisions) (No. 2) (Jersey) Regulations 2005 require the Minister for Treasury and Resources to be  responsible  for  the  development  of  the  Fund's  investment  strategy  in consultation with the States' Investment Adviser (Regulation 3) as he sees fit.
2. In order to meet the Fund's purpose, the investment strategy set is for half of the Fund's assets to work towards an objective of maintaining, with a target to exceeding, the real value of the Fund over a rolling 5-year period; and for the remainder of the Fund's assets to provide sufficiently high levels of income for distribution.
3. It is assumed that, provided the required distribution income is generated, the Trustees will accept some price volatility in their assets in the pursuit of longer- term investment returns.

4. The  strategy  assumes  that  the  distributions  will  be  paid  from  investment income, and that in the long term there will be no requirement to have a separate strategic aim for the holding of cash.
5. Therefore the Minister has set a strategic aim of investing 60% in return-seeking assets (equities and alternative investments class) and 40% in risk-reducing assets, as detailed below –

Strategic Aim  Range

% %

Stock Market assets

Equities  50  45–55 Bonds  40  36–44 Cash  –  0–3

Non-Stock Market assets

Alternative Investments Class  10  N/A

6. The ranges for Stock Market assets only indicate tolerable variations according to investment conditions at any time. Due to the practicalities of Alternative Investments, it is not appropriate to manage these within a small control range.
7. Investigations are currently being carried out into the selection of appropriate alternative investment classes, while being conscious that the Fund achieves the desired levels of returns within the agreed risk profile.
8. The alternative investment class includes a range of pools as detailed within the Common Investment Fund section of this document. Further alternative class pools are expected to be included as opportunities are identified; this document will be updated and presented to the States whenever such pools are added. Until the full anticipated range of alternative pools are operational, monies allocated to alternatives, not invested in the current range of alternative pools, will be invested in existing asset classes.
9. Specific cash limits, such as concentration limits or credit-rating limits, are to be dealt with at the level of the investment pool.
10. Other asset class-specific limits, such as concentration limits, leverage limits or country limits, will be dealt with at the level of the investment pool.
11. No off-balance-sheet vehicles are permitted.

3. Investment structure

3.1  The Fund can carry out its investments through the Common Investment Fund.

ESTATE OF H.E. LE SEELLEUR INVESTMENT STRATEGY

1. Purpose of the Fund

1. Harold Ernest Le Seelleur died on 22nd October 1996, bequeathing assets to the States of Jersey for itself and its successors in perpetuity, for the following purpose, as detailed under his Will dated 28th December 1988 – "for the benefit of aged, infirm and needy residents of the Island.". (The Will was registered in the Royal Court on 27th November 1996.)
2. The acceptance of the bequest by the States was expressed in the terms of proposition P.71/1997 of the then Health and Social Services Committee, adopted by the States on 2nd June 1997. Under the proposition, it was decided that the administration of the Fund should be carried out by that Committee (now the Minister for Health and Social Services).
3. The assets originally settled into the Fund comprised of Jersey-based property. Lifelong enjoyment was provided for 2 properties: Nos. 1 and 4, The Denes, Grève D'Azette, St. Clement .
4. The testator expressly wished that the executor, Mrs. Pugsley, be consulted with a particular view towards the use of the properties for the benefit of aged, infirm and needy residents of the Island.
5. The Will makes no differentiation between whether bequests should be made out of capital or income of the Fund. Therefore this gives the administrators of the Fund the power to distribute all available assets to needy causes as they arise (excluding when properties are held with a life interest).

2. Investment strategy

1. The Will provides no guidance as to how the investments of the Fund should be carried out, therefore the Public Finances (Transitional Provisions) (No. 2) (Jersey) Regulations 2005 require the Minister for Treasury and Resources to be  responsible  for  the  development  of  the  Fund's  investment  strategy  in consultation with the States' Investment Adviser (Regulation 3).
2. The investment strategy has a blend of returns coming from income-producing and growth assets, and is designed to meet the Fund's objectives. The income- producing  assets  should  allow  the  Fund  to  meet  its  ongoing  cash-flow requirements, while the growth assets will help the Fund produce a long-term real return. All the asset classes have been given a range of investable limits.
3. Therefore the Minister has set a strategic aim of investing 65% in return-seeking assets designed to produce long-term returns, and 35% in risk-reducing assets designed to provide stability and income, as detailed in the following table –

Strategic Aim  Range

% %

Growth Assets  65  55–75 Stabilising Assets  35  25–45

Bonds  27

Alternatives (non-property)  5

Cash  3

4. The largest allocation in the strategy is to growth assets; the split between equities and Jersey property is determined by recommendations from Jersey Property Holdings following a review of the properties that were bequeathed to the Fund. The balance of this amount will then be allocated to equities so that growth assets are within the range.
5. The intention is that this Fund will be able to participate in the Common Investment Fund.
6. The ranges indicate tolerable variations according to investment conditions at any time.
7. Specific cash limits, such as concentration limits or credit-rating limits, are to be dealt with at the level of the investment pool.
8. Other asset class-specific limits, such as concentration limits, leverage limits or country limits, will be dealt with at the level of the investment pool.
9. No off-balance-sheet vehicles are permitted.

3. Investment structure

3.1  Investments may be carried out through the Common Investment Fund.

ESTATE OF E.J. BAILHACHE INVESTMENT STRATEGY

1. Purpose of the Fund

1. The late Mrs. Eunice Jane Bailhache (née Hubert), who died on 15th June 1979, bequeathed assets for the following purposes, as detailed in her Will dated 20th September 1974 –
2. "Public of the Island of Jersey for the benefit of the Public Health Committee (now the Minister for Health and Social Services) of the States of Jersey for the general  welfare  of  persons  elderly,  and/or  blind  or  sick  at  the  General Hospital."
3. The  Law  Officers'  Department,  in  their  letter  dated  24th  October  1994, provided a definition of welfare as "health, happiness and general wellbeing".
4. The acceptance of the bequest by the States was delayed for a number of years as the Will was contested. Eventually, in March 1984, a settlement was agreed on the basis that 60% of the estate should be retained by the Public of the Island. This was passed in Court on 25th January 1985.
5. The  States  accepted  the  bequest,  made  up  mostly  of  properties,  under proposition P.13/1985 of the Public Health Committee on 12th March 1985. The proposition resolved that the administration of the Fund should be carried out by the Public Health Committee (now the Minister for Health and Social Services).

6. Since the States' acceptance of the Fund, the Fund still continues to hold mainly properties, which are all based in Jersey and are rented out. Over recent years, some of the original bequeathed properties have been sold as there was no further use for them, and the sale proceeds were re-invested into new properties.
7. The Will makes no differentiation between whether distributions should be made out of capital or income of the Fund. Therefore this gives administrators of the Fund powers to distribute all available assets to projects as they arise.

2. Investment strategy

1. The Will provides no guidance as to how the investments of the Fund should be carried out, therefore the Public Finances (Transitional Provisions) (No. 2) (Jersey) Regulations 2005 require the Minister for Treasury and Resources to be  responsible  for  the  development  of  the  Fund's  investment  strategy  in consultation with the States' Investment Adviser (Regulation 3), as he sees fit.
2. The investment strategy has a blend of returns coming from income-producing and growth assets and is designed to meet the Fund's objectives. The income- producing  assets  should  allow  the  Fund  to  meet  its  ongoing  cash-flow requirements, while the growth assets will help the Fund produce a long-term real return. All the asset classes have been given a range of investable limits.
3. Therefore the Minister has set a strategic aim of investing 65% in growth assets (Jersey property and equities) designed to produce long-term returns, and 35% in stabilising assets (bonds, alternatives and cash) designed to provide stability and income, as detailed below –

Strategic Aim  Range

% %

Growth Assets  65  55–75 Stabilising Assets  35  25–45

Bonds  27

Alternatives (non-property)  5

Cash  3

4. The largest allocation in the strategy is to growth assets, the split between equities and Jersey property is determined by recommendations from Jersey Property Holdings following a review of the properties that were bequeathed to the Fund. The balance of this amount will then be allocated to equities so that that growth assets are within the range.
5. The intention is that this Fund will be able to participate in the Common Investment Fund.
6. The ranges indicate tolerable variations according to investment conditions at any time.
7. Specific cash limits, such as concentration limits or credit-rating limits, are to be dealt with at the level of the investment pool.

8. Other asset class-specific limits, such as concentration limits, leverage limits or country limits, will be dealt with at the level of the investment pool.
9. No off-balance-sheet vehicles are permitted.

3. Investment structure

1. The Fund can carry out investment through the Common Investment Fund.
2. All the Jersey Properties will remain outside of the Common Investment Fund. LE DON DE FAYE TRUST FUND INVESTMENT STRATEGY

1. Purpose of the Fund

1. Jurat Percy Chambers Cabot died on 24th April 1959, and bequeathed his assets to the Treasurer of the States of Jersey ("the Trustee"), to set up a Trust Fund called "Le Don de Faye" after the death of the annuitant, his unmarried sister, Alice Jane Chambers (Lilian') Cabot. The Trust Fund was created in memory of his late wife, Vera Mary de Faye, and of her late father, Thomas Louis de Faye, Major, Royal Militia of the Island of Jersey.
2. The Will, dated 7th June 1958, states that the assets are to be held in trust, for the following purpose (the Will was probated on 29th April 1959) –
3. "to distribute the annual income of the Fund (not necessarily in equal sums) for the sole discretion of the Rectors and their Churchwardens of the twelve parishes, for them to have sole discretion to distribute to needy parishioners of all social standing in each parish."
4. Under the terms of the Will, the income of the Fund is to be apportioned and distributed in the name of the bequest "Le Don de Faye", 2/13th to the Rector and Churchwardens of St. Clement in the first week of December; and 1/13th to each of the Rectors and Churchwardens of the other 11 parishes in the third week of December.
5. The Treasurer, as Trustee for the Fund, is required to carry out the following duties –

• To hold the capital of the Trust Fund, together with the accumulated income as shall have accrued, together with any other liquid assets of the personal estate in the Trust.
• To invest the residue and proceeds of the Trust Fund as directed by the Committee of the States responsible for the controlling and supervising the  finances  of  the  States  of  Jersey  (formerly  the  Finance  and Economics Committee, now the Minister for Treasury and Resources).

6. The Will clearly states that the bequests should only be made out of the income of the Fund, and therefore the capital of the Trust Fund should be preserved and not distributed.

2. Investment strategy

1. The Will provides no guidance as to how the investments of the Fund should be carried out, therefore the Public Finances (Transitional Provisions) (No. 2) (Jersey) Regulations 2005 require the Minister for Treasury and Resources to be  responsible  for  the  development  of  the  Fund's  investment  strategy  in consultation with the States Investment Adviser (Regulation 3), as he sees fit.
2. In order to meet the Fund's purpose, the investment strategy set is for half of the Fund's assets to work towards an objective of maintaining, with a target to exceeding, the real value of the Fund over a rolling 5-year period; and for the remainder of the Fund's assets to provide sufficiently high levels of income for distribution.
3. It is assumed that, providing the required distribution income is generated, the Trustees will accept some price volatility in their assets in the pursuit of longer- term investment returns.
4. The  strategy  assumes  that  the  distributions  will  be  paid  from  investment income, and that in the long term there will be no requirement to have a separate strategic aim for the holding of cash.
5. Therefore the Minister has set a strategic aim of investing 60% in return-seeking assets (equities and alternative investments class) and 40% in risk-reducing assets, as detailed below –

Strategic Aim  Range

% %

Stock Market assets

Equities  50  45–55 Bonds  40  36–44 Cash  –  0–3

Non-Stock Market assets

Alternative Investments Class  10  N/A

6. The intention is that this Fund will be able to participate in the Common Investment Fund. Initially, assets will continue to be held in their current holding  percentages  of  unquoted  equities,  cash  balances  and  short-term instruments, such as Certificates of Deposits.
7. The ranges for Stock Market assets only indicate tolerable variations according to investment conditions at any time. Due to the practicalities of alternative investments, it is not appropriate to manage these within a small control range.
8. Investigations are currently being carried out into the selection of appropriate alternative investment classes, while being conscious that the Fund achieves the desired levels of returns within the agreed risk profile.
9. The alternative investment class includes a range of pools as detailed within the Common Investment Fund section of this document. Further alternative class pools are expected to be included as opportunities are identified; this document

will be updated and presented to the States whenever such pools are added. Until the full anticipated range of alternative pools are operational, monies allocated to alternatives, not invested in the current range of alternative pools, will be invested in existing asset classes.

10. Specific cash limits, such as concentration limits or credit-rating limits, are to be dealt with at the level of the investment pool.
11. Other asset class-specific limits, such as concentration limits, leverage limits or country limits, will be dealt with at the level of the investment pool.
12. No off-balance-sheet vehicles are permitted.

3. Investment Structure

1. The Fund can carry out investment through the Common Investment Fund.
2. The Fund's holding in Jersey Water will be retained and held outside of the Common Investment Fund.

GREVILLE BATHE FUND INVESTMENT STRATEGY

1. Purpose of the Fund

1. The late Mr. Greville Inverness Bathe bequeathed assets to the Treasurer of the States of Jersey, for himself and his successors, to be held in Trust for and on behalf of the States for the following purposes, as detailed within his Will dated 9th October 1961. (This Will was deposited and proved in the Registry in Florida on 17th December 1964.)
2. "half the income of the fund should be available for relief & pensions to needy persons of either sex whose legal domicile is in the Island of Jersey, who have rendered service to the Island of Jersey either in an honorary or remunerated administrative or clerical capacity, or whose ancestors were employed or engaged in such service to the Island, but excluding persons who have benefited under the Alice Rayner Fund (Fund A)"

"The other half of the fund is to distribute income for grants to sick or aged persons of either sex & of any age or denomination, resident in the Island of Jersey (Fund B)."

Note: the terminology of Fund A and B was introduced in a Royal Court Judgement made in 1973 (JJ 2513).

3. The Will expressed that the administrators of the Fund should be 4 persons resident and domiciled in the Island of Jersey who are not members of the States Assembly, and would prefer those appointed by the States of Jersey to be Jurats of the Royal Court, as they are non-political and have been elected by an Electoral College established under the law.
4. The acceptance of the bequest by the States and the former Finance and Economics Committee (now the Minister for Treasury and Resources), together with clarification of how the Fund was to be administered, was adopted by the States on 29th April 1964.

5. On  23rd  January  1974,  the  Royal  Court  made  a  judgement  around  the administration of the Fund (page 2534), stating that the administrators need to maintain at the end of December each year a balance of not less than 3 times the current year's payments in Fund A; and that any remaining balances could be transferred into Fund B. In recent years, the use of Fund A and Fund B terminology has been withdrawn, as there were few requests for donations out of Fund A, and a decision was taken that all future claimants be diverted to the Ann Alice Rayner Fund.
6. Day-to-day administration and accounting is the responsibility of the Treasury and Resources Department.

2. Investment strategy

1. The Public Finances (Jersey) Law 2005 (Article 6) requires that the investment of monies be applied in accordance with provisions set out in any special Fund or Trust. Under the provisions of the Will, the Treasurer of the States (the Trustee) is given powers to manage and maintain the investments of the Fund (including the replacement of investments held to liquid assets), and to invest the capital as thought fit and proper. Securities should be held within banks of good standing.
2. In order to meet the Fund's purpose, the investment strategy set is to work towards an objective of maintaining, with a target to exceeding, the real value of the Fund over a rolling 5-year period, coupled with providing sufficiently high levels of income for distribution.
3. The  strategy  assumes  that  the  distributions  will  be  paid  from  investment income, and that in the long term there will be no requirement to have a separate strategic aim for the holding of cash.
4. Therefore the Minister has set a strategic aim of investing 75% in return-seeking assets (equities and alternative investments class) and 25% in risk-reducing assets, as detailed below –

Strategic Aim  Range

% %

Stock Market assets

Equities  65  58–72 Bonds  25  22–28 Cash  –  0–3

Non-Stock Market assets

Alternative Investments Class  10  N/A

5. The ranges for Stock Market assets only indicate tolerable variations according to investment conditions at any time. Due to the practicalities of Alternative Investments, it is not appropriate to manage these within a small control range.

6. Investigations are currently being carried out into the selection of appropriate alternative investment classes, while being conscious that the Fund achieves the desired levels of returns within the agreed risk profile.
7. The alternative investment class includes a range of pools as detailed within the Common Investment Fund section of this document. Further alternative class pools are expected to be included as opportunities are identified; this document will be updated and presented to the States whenever such pools are added. Until the full anticipated range of alternative pools are operational, monies allocated to alternatives, not invested in the current range of alternative pools, will be invested in existing asset classes.
8. Specific cash limits, such as concentration limits or credit-rating limits, are to be dealt with at the level of the investment pool.
9. Other asset class-specific limits, such as concentration limits, leverage limits or country limits, will be dealt with at the level of the investment pool.
10. No off-balance-sheet vehicles are permitted.

3. Investment Structure

3.1  The Fund can carry out investment through the Common Investment Fund.

ESTATE OF A.H. FERGUSON BEQUEST INVESTMENT STRATEGY

1. Purpose of the Fund

1. The late Mr. Alexander Hugh Ferguson, who died on 20th September 1982, bequeathed the remainder of his assets, for the following purposes, as detailed within his Will dated 13th November 1980 –
2. "I give all my estate wheresoever and whatsoever (save and except Real Estate situate in the said Island of Jersey) unto the Public Health Committee (now the Minister for Health and Social Services) of the States of Jersey and I desire them to apply the same for the benefit of the Intensive Care Unit at the Jersey General Hospital."
3. This means that the administration of the Fund is the responsibility of the Minister  for  Health  and  Social  Services  (formerly  the  Public  Health Committee).
4. The Will makes no differentiation as to whether distributions should be made out of the capital or income of the Fund. Therefore this gives administrators of the Fund powers to distribute all available assets to projects as they arise.

2. Investment strategy

1. The Will provides no guidance as to how the investments of the Fund should be carried out, therefore the Public Finances (Transitional Provisions) (No. 2) (Jersey) Regulations 2005 require the Minister for Treasury and Resources to be  responsible  for  the  development  of  the  Fund's  investment  strategy  in consultation with the States' Investment Adviser (Regulation 3) as he sees fit.

2. In order to meet the Fund's purpose, an investment strategy has been set to enable income distributions of £9,000 per annum, working towards its objective of maintaining, with a target to exceeding, the real value of the Fund over a rolling 5-year period.
3. It is assumed that, provided the required distribution income is generated, the Trustees will accept some price volatility in their assets in the pursuit of longer- term investment returns.
4. The strategy assumes that the distributions will be paid from the investment income, and that in the long term there will be no requirement to have a separate strategic aim for the holding of cash.
5. Therefore the Minister has set a strategic aim of investing 60% in return-seeking assets (equities and alternative investments class), and 40% in risk-reducing assets, as detailed below –

Strategic Aim  Range

% %

Stock Market assets

Equities  50  45–55 Bonds  40  36–44 Cash  –  0–3

Non-Stock Market assets

Alternative Investments Class  10  N/A

6. The ranges for Stock Market assets only indicate tolerable variations according to investment conditions at any time. Due to the practicalities of alternative investments, it is not appropriate to manage these within a small control range.
7. Investigations are currently being carried out into the selection of appropriate alternative investment classes, while being conscious that the Fund achieves the desired levels of returns within the agreed risk profile.
8. The alternative investment class includes a range of pools as detailed within the Common Investment Fund section of this document. Further alternative class pools are expected to be included as opportunities are identified; this document will be updated and presented to the States whenever such pools are added. Until the full anticipated range of alternative pools are operational, monies allocated to alternatives, not invested in the current range of alternative pools, will be invested in existing asset classes.
9. Specific cash limits, such as concentration limits or credit-rating limits, are to be dealt with at the level of the investment pool.
10. Other asset class-specific limits, such as concentration limits, leverage limits or country limits, will be dealt with at the level of the investment pool.
11. No off-balance-sheet vehicles are permitted.

3. Investment structure

3.1  The Fund can carry out investment through the Common Investment Fund.

THE LORD PORTSEA GIFT FUND INVESTMENT STRATEGY

1. Purpose of the Fund

1. On  15th  December  1957,  a  sum  of  £17,000  was  bequeathed  by  the  late Miss Albina Bertram Falle to the Royal Court and the States of Jersey, in accordance with the wishes of her brother, the late Lord Portsea of Portsmouth, for the following purpose –
2. "I give and bequeath to the Royal Court and the States of Jersey the sum of £17,000 to be known as the Lord Portsea Gift Fund, to help all young Jersey and Guernsey boys (of Jersey and Guernsey Parentage) entering the Royal Navy, Army, Air Force and Civil Services who are in need of Financial help."
3. The States accepted the bequest, under a proposition made by the former Education Committee (now the Minister for Education) on 23rd January 1968.
4. The Fund rules and administrative structure were laid out in the Lord Portsea Gift Fund (Jersey) Act 1971, which was later amended under the Lord Portsea Gift Fund (Jersey) Act 1971 (Amendment) Act 1981, and the Lord Portsea Gift Fund (Jersey) Act 1971 (Amendment No. 2) Act 1997.
5. The purpose of the Fund was extended under the 1981 and 1997 amendments to include females as well as males; to increase the upper age limit for grants to 30 years old; and to widen the range of occupations applicable.
6. The  Fund  is  administered  by  a  Grants  Panel  comprising  an  independent Chairman, a Jurat of the Royal Court and a States Member. The Panel held its first meeting on 13th July 2015.
7. The Grants Panel has powers to approve grants at their meetings, generally held twice a year in March and September. Grants can only be funded from the current year income and accumulated income.
8. In the 1971 Act, the former Finance and Economics Committee (now the Minister for Treasury and Resources) has the power to make changes to the investments of the Fund as from time to time considered necessary or expedient.

2. Investment strategy

1. While  the  1971  Act  gives  the  Minister  for  Treasury  and  Resources  the responsibility for investing the capital of the Fund, the Act provides no guidance as to how the investments of the Fund should be carried out. Therefore the Public Finances (Transitional Provisions) (No. 2) (Jersey) Regulations 2005 apply, whereby the Minister for Treasury and Resources is responsible for the development of the Fund's investment strategy in consultation with the States' Investment Adviser (Regulation 3), as he sees fit.
2. In order to meet the Fund's purpose, the investment strategy set is for half of the Fund's assets to work towards an objective of maintaining, with a target to

exceeding, the real value of the Fund over a rolling 5-year period; and for the remainder of the Fund's assets to provide sufficiently high levels of income for distribution.

3. It is assumed that, provided the required distribution income is generated, the delegation will accept some price volatility in their assets in the pursuit of longer-term investment returns.
4. The  strategy  assumes  that  the  distributions  will  be  paid  from  investment income, and that in the long term there will be no requirement to have a separate strategic aim for the holding of cash.
5. Therefore the Minister has set a strategic aim of investing 60% in return-seeking assets (equities and alternative investments class), and 40% in risk-reducing assets, as detailed below –

Strategic Aim  Range

% %

Stock Market assets

Equities  50  45–55 Bonds  40  36–44 Cash  –  0–3

Non-Stock Market assets

Alternative Investments Class  10  N/A

6. The ranges for Stock Market assets only indicate tolerable variations according to investment conditions at any time. Due to the practicalities of alternative investments, it is not appropriate to manage these within a small control range.
7. Investigations are currently being carried out into the selection of appropriate alternative investment classes, while being conscious that the Fund achieves the desired levels of returns within the agreed risk profile.
8. The alternative investment class includes a range of pools as detailed within the Common Investment Fund section of this document. Further alternative class pools are expected to be included as opportunities are identified; this document will be updated and presented to the States whenever such pools are added. Until the full anticipated range of alternative pools are operational, monies allocated to alternatives, not invested in the current range of alternative pools, will be invested in existing asset classes.
9. Specific cash limits, such as concentration limits or credit-rating limits, are to be dealt with at the level of the investment pool.
10. Other asset class-specific limits, such as concentration limits, leverage limits or country limits, will be dealt with at the level of the investment pool.

3. Investment structure

3.1  The Fund can carry out its investments through the Common Investment Fund.

ESTATE OF ROSALIND VINSON INVESTMENT STRATEGY

1. Purpose of the Fund

1. The late Mrs. Rosalind May Vinson, née Harkness, who died on 1st May 2014, bequeathed the remainder of her assets, for the following purposes, as detailed within her Will dated 4th June 2013 –
2. "I give and bequeath the rest and residue of my said estate unto the following charitable organisations in equal shares absolutely: (i) the General Hospital St. Helier , Jersey."
3. This means that the administration of the Fund is the responsibility of the Minister for Health and Social Services.
4. The Will makes no differentiation as to whether distributions should be made out of the capital or income of the Fund. Therefore this gives administrators of the Fund powers to distribute all available assets to projects as they arise.

2. Investment strategy

1. The Will provides no guidance as to how the investments of the Fund should be carried out, therefore the Public Finances (Transitional Provisions) (No. 2) (Jersey)  Regulations  2005 apply,  whereby  the  Minister  for  Treasury  and Resources is responsible for the development of the Fund's investment strategy in consultation with the States' Investment Adviser (Regulation 3), as he sees fit.
2. The Health and Social Services Department do not plan to utilise the Fund for 5 years, following that it is planned that £100,000 will be withdrawn from the Fund per annum until the assets are all used. From this projected cash-flow requirement, the following investment strategy has been devised –

Strategic Aim  Range

% %

Stock Market assets

Equities  65  58–72 Bonds  25  22–28 Cash  –  0–3

Non-Stock Market assets

Alternative Investments Class  10  N/A

3. The ranges for Stock Market assets only indicate tolerable variations according to investment conditions at any time. Due to the practicalities of alternative investments, it is not appropriate to manage these within a small control range.
4. Investigations are currently being carried out into the selection of appropriate alternative investment classes, while being conscious that the Fund achieves the desired levels of returns within the agreed risk profile.

5. The alternative investment class includes a range of pools as detailed within the Common Investment Fund section of this document. Further alternative class pools are expected to be included as opportunities are identified; this document will be updated and presented to the States whenever such pools are added. Until the full anticipated range of alternative pools are operational, monies allocated to alternatives, not invested in the current range of alternative pools, will be invested in existing asset classes.
6. Specific cash limits, such as concentration limits or credit-rating limits, are to be dealt with at the level of the investment pool.
7. Other asset class-specific limits, such as concentration limits, leverage limits or country limits, will be dealt with at the level of the investment pool.
8. No off-balance-sheet vehicles are permitted.

3. Investment structure

3.1  The Fund can carry out its investments through the Common Investment Fund.

OTHER FUNDS AND THEIR INVESTMENT STRATEGIES

1.  Background

1. The Treasury and Resources Department manages the investments of over 250 of the States' "other" funds. These can be split into 4 main categories –
   1. Trust and Bequest Funds;
   2. Confiscation Funds;
   3. Special Funds; and
   4. Jersey Post Office Pension Fund.
2. Trust and Special Funds have been dealt with in the above Appendices. CONFISCATION FUND STRATEGY
3. Purpose of the Fund

1.3.1  The Criminal Offences Confiscation Fund falls into this category.

4. Strategy

1. These Funds invest in cash balances, as the legislation governing them states that funds, while not applied for any of the purposes required by the governing legislation, will be placed "in a current or deposit account".
2. Legal advice is being sought to ascertain whether it is possible to use other investment vehicles in order to maximise returns to these Funds. Once the advice is received, the strategy relating to these Funds may be amended.

JERSEY POST OFFICE PENSION FUND STRATEGY

5. Purpose of the Fund

1. When Jersey Post International Limited was incorporated under the provisions of the Postal Services (Transfer) (Jersey) Regulations 2006, the liability for the provision of pensions from the Jersey Post Office Pension Scheme, a closed scheme, transferred to the States.
2. In order to meet this liability, the States also transferred the Jersey Post Office Pension Fund, consisting of assets that exactly matched the future pension liabilities of the scheme (fully funded).

6. Strategy

1.6.1  As the scheme is closed to new entrants and its liabilities (future pension payments) are linked to the cost of living, the investment strategy seeks to invest in assets that closely match these liabilities. As such, the Fund is predominantly invested in index-linked gilts, as these are likely to provide the best match against the scheme's future liabilities.

STATES OF JERSEY – COMMON INVESTMENT FUND STRATEGIES

1. INTRODUCTION

1. This strategy document is presented in accordance with the terms of the Public Finances (Jersey) Law 2005 (Article 6) ("the Finance Law"), and the Public Finances  (Transitional  Provisions)  (No. 2)  (Jersey)  Regulations  2005 (Regulation 4), which require that the Minister for Treasury and Resources presents his investment strategies for States funds.
2. The  strategies  set  by  the  Minister  pay  particular  regard  to  the  need  for diversification, in both the management of the money available and the level of funds to be invested.
3. The  Treasurer  of  the  States  is  responsible  for  ensuring  that  the  States' investments are properly managed, controlled and accounted for in accordance with the relevant investment strategies.
4. This document provides details on the Investment Strategies for the States of Jersey – Common Investment Fund and its various investment pools.
5. The Common Investment Fund is an administrative arrangement open only to States of Jersey Funds. It provides Funds with the opportunity to pool their resources and benefit from greater investment opportunities and economies of scale. Each Fund will hold units in the Common Investment Fund's asset pools in line with their individual investment strategies.
6. The strategy reflects the Minister's long-term investment aims for the States of Jersey – Common Investment Fund.
7. This report includes information on matters relating to the States of Jersey investment strategies. This information is for this specific purpose only, and should not be used for any other purpose.

2. INVESTMENT STRATEGY

1. States of Jersey – Common Investment Fund

1. Purpose of the Fund
2. The States of Jersey – Common Investment Fund was established by Projet P.35/2010, lodged on 22nd March 2010 by the then Minister for Treasury and Resources. The Projet was in the form of draft legislation, entitled "Draft Public Finances (Transitional Provisions) (No. 2) (Amendment) (Jersey) Regulations 201-". The purpose of the Projet was to amend several existing Regulations and to create a new Regulation under the Public Finances (Transitional Provisions) (No. 2) (Jersey) Regulations 2005, to enable the pooling of States Funds' assets for investment purposes. This was adopted by the States on 12th May 2010.
3. The purpose of the States of Jersey – Common Investment Fund is to create an administrative  arrangement which  is  open  only to States of Jersey Funds ("participants") to provide them with the opportunity to pool their resources and benefit from greater investment opportunities and economies of scale.

4. The Fund's objectives are –

• To offer investment pools to participants to enable them to effectively carry out their investment strategies.
• For all participants to continue to control their own asset allocations under the current governance arrangements.
• To ensure that the Fund operates effectively so as not to disadvantage any of its participants in relation to issuing of units and the monthly market valuation for those units. (Monthly unit valuation includes the allocation of monthly pool income and costs.)
• To gain efficiencies in relation to the number of investment managers appointed by the Fund; by benefiting from a reduced number of investment manager  appointments  and  reduced  management  of  day-to-day relationships, therefore resulting in lower administration overheads.
• To endeavour, where feasible, to increase the net return for all participants through economies of scale.
• For the States of Jersey Treasury Advisory Panel and the States of Jersey Common Investment Fund Manager to ensure that the Fund's performance is regularly reviewed, and that it complies with its internal scheme rules; at all times ensuring that adequate controls are in place to manage its exposure of associated investment and operational risks.

5. The following investment pools will be available to all participants of the States of Jersey – Common Investment Fund –

Equity Pools

• Active U.K. Equities Pool
• Active Global Equities Pool
• Active Emerging Market Equity Pool
• Passive Global Equities Pool
• Special Fund Equity Pool

Fixed Income Pools

• U.K. Corporate Bonds Pool
• Global Absolute Return Bond Pool
• U.K. Government Bonds Pools

Cash Pools

• Long-Term Cash and Cash Equivalents Pool

Alternative Investment Pools

• U.K. Pooled Property Pools
• Hedge Funds Pool
• Local Infrastructure Investment Pool
• Opportunities Pool.

6. Each participant will hold units in the Common Investment Fund's individual asset pools in line with their individual investment strategies.
7. Larger  Special  Funds  and  Separately  Constituted  Funds  will  have the opportunity to invest in the Fund as permitted by their legislation/Trust deeds.
8. The Treasury and Resources Department is responsible for the administration of the Fund.
9. The pools will offer accumulation units only to participants, and trading in units is only permitted monthly.
10. The following section outlines the investment approach of each respective Common Investment Fund pool. Each pool is managed by an investment manager, or multiple managers, operating under a specific mandate stipulating investment objectives, limitations and conditions designed to manage both the scope of investment and risk/return characteristics of the pool. These underlying investment conditions are not detailed within the investment strategy document, are deemed to be part of the operational arrangements of the pool, and may be subject to modification to respond to changing circumstances. These are outside the scope of the investment strategy and may be determined or modified by the Treasurer of the States or delegate of the Treasurer.
11. Changes to the underlying mandate of any pool will be assessed against the investment approach detailed below. Any mandate changes deemed significant enough to modify the investment approach of the pool will require the States of Jersey Investment Strategies to be resubmitted to the States.
12. Statement on currency hedging

The  States  of  Jersey  maintains  investments  that  may  be  denominated  in currencies other than Sterling. Where the States is exposed to the risk posed from foreign currencies, the following policy applies –

Global equities are not, under normal circumstances, hedged back to Sterling. Bonds within the Common Investment Fund may be hedged, but this is typically dealt with within the Fund structure and no further consideration is taken. The majority of the foreign currency risk within the Common Investment Fund's Hedge Fund Pool is hedged within the Funds. Where this is not possible due to lack of a Sterling share class, 95% of the exposure will be hedged within the pool.

Under advice from the Treasury Advisory Panel, further hedging arrangements, in addition to those described above, may be entered into to protect the States' investments  from  movements  in  exchange  rates  to  which  they  would  be exposed; this includes (but is not limited to) the use of currency derivatives.

INVESTMENT STRATEGIES FOR EACH INVESTMENT POOL Equity Pools:

2. Active U.K. Equities Pool

1. The focus of the Active U.K. Equities Pool is to invest in U.K. equities which are constituents of the FTSE All-Share Index. Although the focus of the pool is to generate returns through investment in U.K. equity, some sectors of the FTSE All-Share index can be concentrated in a small number of stocks. Accordingly, to allow the pool to build an appropriately balanced portfolio, the strategy provides the flexibility to invest a small, but limited, proportion of the pool in non-U.K. equities or cash when deemed desirable by the investment manager.
2. The pool seeks to generate returns which are in excess of those generated by the U.K. market benchmark.
3. The pool seeks to earn long-term returns by allocating its assets to a well- diversified mix of U.K. equities. At the same time, the equity portfolio assumes a larger amount of risk. During shorter periods of time, it is quite possible for the  portfolio  to  produce  lower  returns  than  the  risk-reducing  asset  pools (bonds/cash). Therefore the  equity portfolio is  particularly appropriate  for Funds which choose to invest monies with a longer-term horizon, and therefore should serve as one of the main sources of long-term portfolio growth.
4. The pool is not permitted to trade in derivatives such as options or futures.

3. Active Global Equities Pool

1. The Active Global Equities Pool contains a number of managers, due to the expected high allocation to this asset class. Multiple managers are utilised to diversify manager risk and to ensure against over-concentration with a single provider. The focus of the  pool is to invest in global equities which are constituents of the MSCI All-Country World Index or similar global index. Each manager is permitted some flexibility to invest a small portion of its overall portfolio in equity from countries outside the MSCI All-Country World Index, or in cash, when deemed desirable by the investment manager.
2. The pool seeks to generate returns which are in excess of those generated by the global market benchmark.
3. The Active Global Equity Pool seeks to earn long-term returns by allocating its assets to a well-diversified mix of global equities. Equity portfolios are expected to be higher-risk pools than the fixed-income pools, in so far as they are expected to demonstrate higher volatility in their valuations. During shorter periods of time, it is quite possible for the portfolio to produce lower returns than the risk-reducing asset pools (bonds/cash). Therefore the equity portfolio is particularly appropriate for Funds which choose to invest monies with a longer-term horizon, and therefore should serve as one of the main sources of long-term portfolio growth.

4. The pool is permitted to purchase foreign exchange-type derivatives such as forwards, but only for the  purpose of hedging,  cost-effective  exposure to countries within the Index, or in respect of the settlement of equity transactions/ dividend receipts which are in currencies other than Sterling. Managers may also purchase derivatives for the purpose of gaining exposure to countries within the Index in a cost-effective manner; these exposures, however, are strictly controlled. Short selling of stocks is not permitted.

4. Active Emerging Market Equities Pool

1. The Active Emerging Market Equities Pool seeks to earn long-term returns by allocating its assets to a diversified mix of equity held in companies operating within emerging markets as defined by the MSCI Emerging Market Index or equivalent index. The pool seeks to provide structural exposure to emerging markets to complement the exposures which may be obtained through the Active Global and Active UK Equity Pool which focus on the developed world. During shorter periods of time, it is quite possible for the portfolio to produce lower returns than the risk-reducing asset pools (bonds/cash). Therefore this portfolio is particularly appropriate for Funds which choose to invest monies with a longer-term horizon, and therefore should serve as one of the main sources of long-term portfolio growth.
2. The Active Emerging Market Equities Pool seeks to generate returns which are in excess of those generated by the emerging market benchmark.
3. The pool is permitted to purchase foreign exchange-type derivatives such as forwards, but only for the  purpose of hedging, cost-effective  exposure to countries within the Index, or in respect of the settlement of equity transactions/ dividend receipts which are in currencies other than Sterling. Managers may also purchase derivatives for the purpose of gaining exposure to countries within the Index in a cost-effective manner; these exposures, however, are strictly controlled. Short selling of stocks is not permitted.

5. Passive Global Equity Pool

1. The Passive Global Equity Pool seeks to mimic the returns of the FTSE World Index. The pool will seek to be 100% invested in equity, holding cash only on a transitional basis between equity purchases and withdrawals from the pool.
2. As a passive pool, it will not actively seek out performance, but will instead replicate the FTSE World Index at a lower cost than the actively managed pools.
3. The pool seeks to earn long-term returns by allocating its assets to replicate the make-up of the FTSE World Index. All equity portfolios assume a larger amount of risk; during shorter periods of time it is quite possible for the portfolio  to  produce  lower  returns  than  the  risk-reducing  asset  pools (bonds/cash). Therefore, the equity portfolio is particularly appropriate for Funds which choose to invest monies with a longer-term horizon and should, therefore, serve as one of the main sources of long-term portfolio growth.

4. The pool is permitted to purchase foreign exchange-type derivatives such as forwards, but only for the  purpose of hedging, cost-effective  exposure to countries within the Index, or in respect of the settlement of equity transactions/ dividend receipts which are in currencies other than Sterling. Managers may also purchase derivatives for the purpose of gaining exposure to countries within the Index in a cost-effective manner; these exposures, however, are strictly controlled. Short selling of stocks is not permitted.

6. Special Fund Equity Pool

2.6.1  In cases where tax structuring potentially precludes a Fund from participating in one of the greater investment pools, a segregated unitised structure may be employed to ensure against tainting of the greater pool. In these cases, the vehicle will reflect, to as great a degree as possible, the arrangements which exist in the greater pools. The Special Equity Pool provides a mix of active equity managers to allow those Funds who cannot participate in the greater pools to benefit from active management without putting the greater pooling arrangement at risk.

Fixed Income Pools:

7. Corporate Bond Pool

1. The  Corporate  Bond  Pool  will  invest  in  Sterling  denominated  corporate investment grade debt. This may include debt issued by overseas subsidiaries where the holding company is a U.K. company, or Sterling denominated debt guaranteed  by  overseas  quoted  companies  or  supranationals.  The  pool  is permitted some flexibility to invest a small portion of its overall portfolios in cash when deemed desirable by the investment managers.
2. The pool seeks to generate returns which are in excess of those generated by the U.K. corporate bond benchmark.
3. The pool seeks yields that are more durable and usually higher than those available from the cash pool. It is suited for Funds that can accept the market- value volatility associated with fluctuations in interest rates in order to earn a higher level of income over time than is generally available in the cash pools.
4. The limited use of derivative instruments is permitted to modify duration within set limits. The use of these instruments enables the investment manager to implement their strategic views on overall duration in a more cost-efficient and timely manner.

8. Global Absolute Return Bond Pool

1. The Global Absolute Return Bond Pool is an unconstrained debt-focused pool which invests in a wide fixed-income universe, and has greater discretion than the U.K. Corporate and Government Bond Pools. The pool is permitted some flexibility to invest a small portion of its overall portfolio in cash when deemed desirable by the investment managers.

2. The pool will pursue absolute return strategies and seek to consistently achieve positive returns in all market conditions.
3. The pool tends to exhibit low correlation with fixed-income benchmarks, and so complements investment in the Corporate Bond Pool to reduce the overall volatility of fixed-income returns. Through active management, the pool seeks to earn a higher level of income over time than is generally achievable from the cash pools.
4. The pool is permitted to purchase forward foreign exchange contracts for the purpose of hedging, or in respect of the settlement of transactions/interest receipts which are in currencies other than Sterling. The pool is also permitted to utilise derivatives in the form of options and futures, and can take both long and short positions.

9. Government Bonds Pools

1. The U.K. Government Bonds Pools are split between a Short-Term Government Bond Pool and an Index-Linked Government Bond Pool; each of which will invest in debt issued by the U.K. government.
2. The pools are not actively managed, but passively follow a buy and hold' mandate, passively maintaining the overall duration of each respective pool.
3. The pools will seek to be 100% invested in Sterling denominated debt of the U.K.  government,  holding  cash  only,  on a  transitional  basis  between  gilt purchases and withdrawals from the pool.
4. The pools are not permitted to trade in derivatives such as options or futures. Cash Pools:

10. Long-Term Cash and Cash Equivalents Pool

1. The Long-Term Cash and Cash Equivalents Pool will invest in cash and cash- equivalent-type  instruments,  including  cash  deposits,  commercial  paper, Treasury bills, certificates of deposit and floating-rate notes. The Long-Term Cash Pool is expected to produce higher returns than the operational Short- Term Cash Pool, as it is able to purchase instruments with a longer maturity, though the rate of return for this pool is expected to vary with available interest rates.
2. The pool seeks to generate returns which are in excess of short-term LIBOR.
3. The pool has a strict mandate to ensure that placements by the manager can only be made with institutions with a sufficiently high credit-rating.
4. If assets fall below a minimum credit-rating, they must be sold by the manager, unless specific exemption is granted by the Treasurer of the States.

5. The Treasurer may allow deposits to be placed with institutions outside the minimum industry ratings described above, in cases where the Treasurer has agreed a specific exemption and deems the overall chance of default not to be significantly increased.
6. No off-balance-sheet vehicles, foreign exchange exposure, convertible bonds or investments which suffer withholding tax are permitted.

Alternative Investment Pools:

11. U.K. Pooled Property Pools

1. The U.K. Pooled Property Pools are to invest in existing pooled funds, investing both directly and indirectly in U.K. property; this will allow diversification across a portfolio of properties without acquiring and holding property directly. The property portfolio will focus on commercial property, investing principally, but not exclusively, in the retail, office and industrial/warehouse sectors. The pools are permitted some flexibility to invest a small portion of their overall portfolio in cash when deemed desirable by the investment managers.
2. The pools seek to generate returns which are in excess of appropriate U.K. property benchmarks.
3. The property pools seek to earn an income return and long-term capital returns by allocating assets either directly or indirectly, where the managers believe that over the medium term, occupational demand for accommodation will be strong or supply restricted, thus providing the foundation for good relative rental growth and consequently enhanced capital values. During shorter periods of time, it is quite possible for the portfolio to produce lower returns than the risk- reducing asset pools (bonds/cash). Combined with reduced liquidity due limits placed on redemptions, the portfolio is particularly appropriate for Funds which choose to invest monies with a longer-term horizon.
4. The pool is not permitted to trade in derivatives such as options or futures, although the underlying Funds may have exposure to derivatives.

12. Hedge Fund Pool

1. The Hedge Fund Pool is structured as a portfolio of single-strategy hedge funds with 8–12 hedge funds appointed directly to the Pool. The combination of managers is designed to provide desired characteristics for the pool as a whole to meet the desired characteristics of investing funds.
2. The  combination  of  managers  is  designed  to  provide  a  target  return  of LIBOR + 4–6%, while providing protection in downturns and non-correlation with equity-class assets.

3. To ensure appropriate diversification of manager risk, the portfolio is to contain an  allocation  to  a  minimum  of  8  hedge  fund  managers.  The  pool  may transitionally hold less than 8 managers during construction of the pool or through removal of a manager. In this case, the matter must be raised to the attention of the Treasury Advisory Panel, who will recommend steps to ensure risk is managed.
4. Some of the Hedge Fund positions incorporate lock-in conditions limiting immediate liquidity; participants in the pool are aware that such restraints may prevent monthly trading, and consideration of these restraints is made at a strategy level before investment in the pool is made.

13. Local Infrastructure Investment Pool

1. The Local Infrastructure Investment Pool includes opportunistic allocations to low-risk local infrastructure projects. These projects may include a diverse range  of  potential  opportunities,  including  local  housing  projects  and government infrastructure projects.
2. Appropriate projects are expected to be small in scale, under £10 million in value, and short in duration, under 5 years from drawdown to settlement.
3. Individual projects will be assessed for appropriateness by the States Treasury, reviewed by the Treasury Advisory Panel, and approved at ministerial level.
4. Each project will be contracted separately for a defined timescale; projects are considered from investment perspective and provide a better risk/return profile than would otherwise be available through conventional assets.
5. Examples  of  appropriate  projects  would  include  investments  in  Parish affordable housing construction projects. A proportion of funding for schemes could be supplied through States investment, where investment terms and risks are deemed appropriate. This would provide social benefit to the Island, cost- effective funding, and a superior rate of investment return than would be available from equivalent low-risk assets.

14. Opportunities Pool

1. The Opportunities Pool invests in non-traditional asset classes which seek to generate long-term growth but are expected to be less correlated with other growth class assets such as equities.
2. The  portfolio  will seek  to  access  the  illiquidity  premium  associated  with investing in asset classes that require money to be locked up for a period of time, or have barriers to entry such as high initial transaction costs.
3. The assets in the opportunities portfolio are expected to be illiquid (closed ended'), which means that they are not suitable for all participants, the time horizon over which the investment is expected to perform is far longer than other asset classes, and will require commitments to be made over a significant period.

4. Because of the structure of these investment classes, commitments will be drawn  slowly  as  opportunities  are  identified  by  the  managers.  The Opportunities Pool will therefore build up over time as opposed to being fully funded at outset.
5. Because of the long drawdown period, the appointment of managers will be staggered over time to allow diversification over vintages and to allow the total value of drawn capital to be managed. Commitments will need to be made by participants on entrance into the Pool, with the understanding that additional managers will be appointed over time.
6. Appropriate manager classes will be determined based upon conditions at the time of appointment, and are expected to include property debt, direct lending and infrastructure. Manager appointment is expected to be staggered over time in order to achieve diversification over both source of return and vintage.