Legg Mason's association investment program.
Need some help taming the bulls and bears? Call the professionals in Legg Mason's Association Investment am (ALP), which Legg Mason developed in consultation with the American Society of Association rives (ASAE) to help nonprofit organizations manage their financial assets. Servicing more than 500 client accounts throughout the country, the program currently manages association reserves, foundations, scholarship funds, deferred compensation, endowments, and retirement funds.
"Legg Mason Wood Walker, Inc., has made a strong commitment to ASAE to support associations in managing the investment process," says Jim Brinkley, president, Legg Mason Wood Walker, Inc., Baltimore, Maryland.
Start with an investment policy
"AIP consultants are trained to assist executives in managing the investment process for their associations," says Michael Graham, vice president and director of Legg Mason's ASAE AIP "We understand the unique needs and the decision-making process of nonprofit organizations."
He describes the investment process as an ongoing, three-step process that involves developing a written investment policy, implementing the policy, and evaluating performance.
The foundation of an effective investment program, Graham explains, is a customized, written investment policy "This promotes continuity of sound investment strategy and demonstrates that you, as a fiduciary, have made every effort to choose suitable investment vehicles. A well-documented, written investment policy will also assist you in meeting your fiduciary obligations."
According to Graham, an investment policy document is typically organized into five sections:
1. Procedures. This section identifies the parties associated with the fund and the functions, responsibilities, and activities of each.
2. Statement of purpose. This area provides background information about the fund, including its type, the specific purpose for which it was established, its sources of contributions, its anticipated cash flow, and its liquidity requirements.
3. Investment objectives and goals. This portion of the policy describes the fund sponsor's return expectations, sensitivity to risk, and time horizon, as well as the specific targets for measuring whether objectives have been met.
4. Investment guidelines. These guidelines, which provide the framework within which investments are made, may pertain to proxy voting, liquidity needs, trading and executive guidelines, or social responsibility in investing. Asset mix guidelines identify asset classes - such as large cap stocks, mid cap stocks, small cap stocks, international stocks, intermediate bonds, international bonds, and high yield bonds - approved for investments with the maximum and minimum range for each asset category.
5. Investment performance review and evaluation. This section establishes the basis for measuring and evaluating fund and manager performance.
Making investment decisions
Once a written policy is in place, your Legg Mason AIP consultant prepares a proposal detailing the approach he or she recommends to cost effectively implement your association's investment policy Depending on your association's objectives and investment time horizon, the consultant may recommend one or more of the following:
* Individually managed portfolios. Using the services of Legg Mason's Investment Consulting Group, your AlP consultant will conduct a search for registered investment advisors to manage your portfolio.
* Mutual Solutions. Selecting from more than 7,200 no-load or load-waived mutual funds, Legg Mason identifies appropriate funds to implement your written investment policy Mutual Solutions is a customized, fee-based portfolio of mutual funds with tax lot accounting, time-weighted performance, consolidated monthly statements, and quarterly reports.
"You will be led through the process by a consultant experienced in working with associations," says Graham. "The process is dynamic and ongoing. Once an investment program is initiated our job is not done. We will continue to evaluate your investments and provide consultation services to ensure your investments are consistent with your current mission and financial status."
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|Title Annotation:||Business Partners|
|Date:||Sep 1, 1998|
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