Purpose
The purpose of this Investment Policy Statement (IPS) is to establish sound and effective guidelines in supervising, monitoring and evaluating Diaspora Capital Group’s investment Portfolio (Portfolio). This statement also incorporates accountability standards that will be used in monitoring progress of the capital investment portfolio. The investment program is defined in the various sections of this IPS by:
Background
This IPS has been arrived at upon consideration of the Organization’ wide range of policies, and describes the prudent investment process it deems appropriate. This process includes offering various asset classes and investment management styles that, in total, areexpected to offer the opportunity to diversify the portfolio in a manner consistent with the specified risk and return requirements of theportfolio.
Our Investment goals and objectives are both short term profitability, long term growth and preservation of capital.
Time Horizon
The investment guidelines are based upon an investment horizon of no less than twoyears and greater than five years. The Organization’s strategic asset allocation is alsobased on this long-term perspective. Short-term liquidity requirements are anticipated to be non-existent, or at least should be covered bycash inflows. Short-term liquidity requirements are anticipated to be minimal.
Risk Tolerances
Diaspora Capital Group recognizes that some risk must be assumed in order to achieve its investment objectives. In establishing therisk tolerances of the IPS, the ability to withstand short and intermediate term variability were considered. A 1-yr loss limit of -5.0% has beencalculated for the portfolio. Statistically speaking, there is a 2.5% chance that the 1-year return will actually be lower than -5.0%.
The organization’s long time horizon, current financial condition and several other factors suggest collectively certain interim fluctuations in the economy that affect rates of return on investments may be tolerated in order to achieve the longer-term objectives.
Performance Expectations
The desired investment objective is a long-term rate of return on assets that is at least 15.4%. The target rate of return for the organization has beenbased upon the assumption that future real returns will approximate the long-term rates of return experienced for each asset class in theIPS. The organization realizes that general economic performance varies and a 15.4% rate of return may not be achieved during some periods. Accordingly,relative performance benchmarks for the investment options are set forth in the “Monitoring” section.
Investment Committee
The Investment Committee (‘the committee) is an objective professional team that acts in a fiduciary capacity in managing the overall investment process with respect to the Capital Investments portfolio and is accountable to the Board and the Executive Committee, for overseeing the investment of all assets owned by, or held in trust for, the portfolio. The Committee is responsible for guiding the organization through a disciplined and rigorous investment process, consisting of:s
Custodian
Custodians are responsible for the safekeeping of the organization’s assets. The specific duties and responsibilities of the custodian are:
Asset Class Guidelines
Investment performance is principally a function of asset class mix. Historically revenue-
generatinginvestments, such as real estate, have the advantage of relative stability of principal value and provide real opportunity for real long-term capitalgrowth. Similarlyinvestments in assets such as public infrastructure, Healthcare, ecommerce and tourism generally have higher expected return but have the disadvantage of much greater cyclical year-by year variability of return. From an investment decision-making point of view, this year-by-yearvariability may be worth accepting given the organization’s long time horizon.
Focusing on balancing the risks and rewards of each broad asset class, the following implementation groups were selected andranked in ascending order of “risk” (least to most) according to the most recent projections.
Long-Term
Intermediate-Term
Rebalancing of Strategic Allocation
The percentage of investment allocation to each asset group in the portfolio may vary depending upon market conditions. Please reference the allocation table below forthe lower and upper limits for each asset group. When necessary and/or available, cash inflows/outflows will be deployed in a mannerconsistent with the strategic asset allocation and allocation ranges of the plan. The allocation of the portfolio willbe reviewed quarterly. If cash flows are insufficient to bring the portfolio within the target allocation ranges, the organization shall decide whether toeffect transactions to bring the allocation of portfolio assets within the threshold ranges.
Asset Group Strategic Allocation Lower Limit Upper Limit
Commercial Real Estate 15% 10% 20%
Residential real Estate 20% 15% 25%
Public Infrastructure10% 5% 15%
Healthcare8% 5% 15%
E-Commerce 10% 7% 17%
Tourism 8% 3% 15%
Implementation
Each investment option will be managed by: (i) Investment committee; (ii) portfolio managers and (iii) the Executive Board.
Monitoring – Performance Objectives
The organization acknowledges portfolio performance fluctuations characterize the underlying economic environment and market conditions, particularly during short-term time periods. Recognizing that short-term fluctuations may cause variations in performance, the organizationintends to evaluate investment performancefrom a long-term perspective. We are aware the ongoing review and analysis of the investment options is just as important as the due diligence process. Theperformance of the investment options will be monitored on an ongoing basis and it is at the organization’s discretion to take corrective action byreplacing management staff if they deem it appropriate at any time.
On a timely basis, but not less than quarterly, the organization will review each investment; specifically:
Monitoring – Benchmarks
Performance benchmarks have been established for each investment option. Manager performance will be evaluated in terms of anappropriate comparable industry performance index (e.g. United States Nahb Housing Market Index, Adventure Tourism Development Index) and the relevant peer groups.
Peer Group Benchmark Index
Commercial Real Estate -Sperry Van Ness (SVN), NAI Global, Holliday Fenoglio Fowler (HFF), Newmark Grubb Knight Frank
Residential real Estate – Camden Property Trust, The Corcoran Group, Sotheby’s International Realty
Public Infrastructure-Laing O’Rourke,Royal BAM Group, Bouygues Construction, Bechtel, Kiewit
Healthcare-
E-Commerce – Alibaba, eBay, Amazon
Tourism – JOURNEYS International, Mountain Lodges of Peru, Classic Journeys, Kayak, Priceline, Hotwire
Monitoring – Watch List Criteria
The decision to retain or terminate an investment option cannot be made by a formula. Also, extraordinary events do occur that may interferewith the investment assets’performanceIt is the Organization’s confidence in the investment option’s ability toperform in the future that ultimately determines the retention of an investment option. An investment option may be placed on a Watch Listand a thorough review and analysis of the investment option may be conducted based on the most recent 3 consecutive quarters’ performance relative to the industry and peer groups benchmarks set above. , when:
Expenses
Prospectus Net Expense Ratio
Threshold: Top 50% of peer | Pass 3 of the last 4 quarters | Treat missing data values as a failure
Performance
10 Year Return
Threshold: Top 50% of peer | Pass 7 of the last 8 quarters | Treat missing data values as a failure
3 Year Return
Threshold: Top 50% of peer | Pass 7 of the last 8 quarters | Treat missing data values as a failure
5 Year Return
Threshold: Top 50% of peer | Pass 7 of the last 8 quarters | Treat missing data values as a failure
Monitoring – Measuring Costs
The organization will review at least annually all costs associated with the management of the portfolio, including:
Investment Policy Review
The IPS will be reviewed at least annually to determine whether stated investment objectives are still relevant and the continued feasibility ofachieving the same. It is not expected that the IPS will change frequently. In particular, short-term changes in the financial markets should not require adjustments to the IPS.
Prepared by Signature Date
David Ochwangi
Founder – President &CEO