The Asset Allocation Policy embodies the Board’s decisions about what proportions of FUM shall be invested in equities, fixed income securities, real estate and other investments.

• The asset allocation policy is consistent with statutory limits and produces an estimated long-term return commensurate with the Board's investment objectives.

Diversification

Diversification is designed to reduce the risk of loss resulting from over concentration of assets in a single maturity, specific issuer or single class of securities.

• The IPC in conjunction with the IMC and Head, Investment Management ensure that reasonable diversification of securities is maintained at all times.
• Securities are diversified with respect to exposures to economic sectors, industries and individual securities.
• Securities portfolio diversification policies establish sound and prudent aggregate and individual exposure limits for each type or class of security, and for single counterparties and groups of associated counterparties in which Trustfund is permitted to invest. Exposure limits are as defined by the RMC.
• Limits by class of security include limits for how much of the portfolio are made up of specific types of securities such as equities and the portfolio concentration by geography and industrial sector.

• The IPC approves investment instruments based on the due diligence and resulting recommendation of the IMC, RMC and Head, Investment Management.
• In selecting investment instruments, the risk rating of instruments that has been undertaken by a recognized risk rating company (registered under the Investment & Securities Act 1999) is considered.
• Selection of counterparties who are eligible for transactional relationships is based on compliance with RMC approved risk acceptance criteria and minimum counterparty risk rating.
• Authorized brokers are limited to primary dealers or dealers that qualify under the Investment and Securities Act 1999. The Head, Investment Management recommends to the IMC and IPC for approval detailed guidelines for selecting brokers to act on behalf of the company in buying and selling securities.
• In selecting brokers, the IMC and IPC consider the following key factors in addition to other set guidelines:
1. Financial condition of the broker
2. Level of trading expertise and experience
3. Ability of the broker to minimize trading costs
4. State of technology infrastructure to support seamless communication
• The IMC recommends brokers that meet the defined criteria for adoption and approval by the IPC.
• Where an approved counterparty is an affiliated company or an affiliate or related company of an investor (either individual or institutional) in Trustfund, the IPC evaluates, fully discloses, and explains the impact of any conflict of interest, whether real or imagined, that may arise as a result of the relationship. All such conflicts of interest are adequately addressed and must not be contrary to the fiduciary responsibility of Trustfund to its customers.
• The Head, Investment Management; Head, Operations; Risk Management Lead and Internal Control Lead maintain a list of approved broker/dealers and financial institutions which are authorized to provide investment services for Trustfund. No trading is done through unauthorized brokers or counterparties.

Investment Management Process

• Trustfund has processes that ensure the efficiency of the investment management function while providing adequate controls to reduce the risks associated with funds management. It is the responsibility of each party involved in the investment of FUM to understand the company’s processes and to continually strive to improve the control framework.
• There are three principal groups involved in the investment management process. These groups are the front office, the middle office and the back office. In addition, the investment process is directly supported by other support and control functions including Technology Solutions, Financial Control and the Legal Services & Compliance Management departments.