The Banking and Investment Department is charged with the oversight of NSHE’s pooled Endowment and Operating funds.
Statement of Investment Objective and Policies for the Endowment & Operating
Endowment
This statement of investment objectives and policies (the “Guidelines”) governs the investment management of the endowment fund (the “Fund”) of the Nevada System of Higher Education (the “System”). These Guidelines relate to the Fund as a whole. Because the endowment is perpetual, the investment objectives and policies are based on an investment horizon greater than ten years.
The long-term financial objective of the Fund is to provide a relatively stable stream of spendable revenue that increases over time at least as fast as the general rate of inflation, as measured by the Consumer Price Index. (In order to achieve this objective over the long term, the unit value of the Fund must also increase at least as fast as the rate of inflation.)
The long-term investment objective of the Fund is to attain an inflation-adjusted total return, net of fees, at least equal to the contemplated spending rate of 4.5%. (For example, if average annual inflation were 3.0%, a total nominal return of 7.5% net of fees would have to be earned. In order to achieve this objective over extended periods, endowments have had to exceed the objective substantially during some periods, such as the 1980s, in order to compensate for shortfalls during other periods, such as the 1970s.) (B/R 6/01)
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Operating Fund
This statement of investment objectives and policies (the “Guidelines”) governs the investment management of the Operating Funds (collectively the “Fund”) of the Nevada System of Higher Education (the “System”). These Guidelines relate to the Fund as a whole. Because the Fund is perpetual, the investment objectives and policies are based on an investment horizon greater than ten years.
The Short-Term Pool shall be funded in an amount sufficient to meet the expected daily cash requirements of the System. All cash receipts will be deposited into, and all disbursements will be paid from, this pool. The Short-Term Pool will be invested in fixed income securities generally having an average maturity of one year or less and thus are highly liquid with little risk of principal loss.