Procedures for Investing University Funds (5.12)

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This online version is for convenience; the official version of this policy is housed in the University Secretariat. In case of discrepancy between the online version and the official version held by the Secretariat, the official version shall prevail.

Approving Authority: Vice-President: Finance and Administration

Original Approval Date: November 16, 2023

Date of Most Recent Review/Revision: N/A

Administrative Responsibility: Office of Financial Resources

Parent Policy: 5.12 Investment Policy for University Funds

1.0 Process for University Funds Invested Externally

1.1 The goal of an investment decision is to maximize investment returns while minimizing risk and having an appropriate level of liquidity. Generally speaking, the higher the investment return, the higher the risk and / or lower the liquidity.

1.2 When making an investment decision, the level of risk and level of liquidity must be quantified.

1.3 The level of risk is measured as follows:

• Low – security of capital is preserved and cannot tolerate any decline in original investment.
• Medium –can tolerate a decline of up to 10% in original investment value.
• High – can tolerate a decline of more than 10% in original investment value.

1.4 The level of liquidity is measured as follows:

• High – convertible into cash less than 30 days.
• Medium – convertible into cash between 30 days and 1 year.
• Low – convertible into cash greater than 1 year.

1.5 When making an investment decision, thought should be given to what the funds would be ultimately used for and when it would be used. For example, if the funds are not expected to be needed for 5 years, then the level of liquidity would be low, which would provide for a higher rate of return (all other things being equal). If the capital needs to be preserved, then the level of risk would be low, which would provide for a lower rate of return (all other things being equal).

1.6 When investing in Treasury Bills, GICs, and other similar investments, quotes for interest rates and terms should be requested from a minimum of 4 financial institutions. For all other investments, a Request for Proposal should be completed in conjunction with Procurement.

2.0 Process for University Funds Invested Internally

2.1 Internal Loan requests must be submitted to the VP Finance & Administration and AVP Financial Resources, who will base the approval on the available funds and a business case presented by the borrowing unit.

2.2 Once an Internal Loan is approved, Financial Resources will prepare an agreement outlining the terms of the loan and will provide a copy of the agreement and repayment schedule to the borrowing unit.

2.3 Interest rates for Internal Loans will be fixed for 5 years with a repayment period no longer than 25 years (subject to 2.4 below). Rates for new Internal Loans will be set based on the University bank deposit rate plus a percentage approved annually by the Board of Governors.

2.4 Internal Loans for real estate purchases will be given an interest rate equivalent to the spread between the University current mortgage rate and the University bank deposits rate, if the property is considered collateral and within the strategic direction of the Campus Master Plan.