RELATES TO:
KRS
161.430
NECESSITY, FUNCTION AND CONFORMITY:
KRS
161.310 requires the Teachers' Retirement
System Board of Trustees to promulgate administrative regulations for the
administration of the funds of the retirement system and for the transaction of
business.
KRS
161.430(1) requires the
board of trustees to promulgate administrative regulations to establish
investment policies and procedures to carry out its responsibilities and
provides that the board of trustees shall have full power and responsibility
for the purchase, sale, exchange, transfer, or other disposition of the
investments and money of the Teachers' Retirement System.
KRS
161.677(3) provides that the
board of trustees shall manage the Kentucky Teachers' Retirement System
insurance trust fund in the same general manner in which it administers
retirement funds. The administrative regulation establishes investment policies
and procedures to carry out these responsibilities for the Kentucky Teachers'
Retirement System insurance trust fund.
Section
1.
(1)
(a) The board of trustees shall appoint an
investment committee in accordance with the provisions of
KRS
161.430(1). The trustees
shall be named at the beginning of each fiscal year.
(b) The executive secretary shall act on
behalf of the investment committee in administering the investment policies and
procedures established in this administrative regulation.
(c) To ensure a timely market transaction,
the executive secretary and the chief investment officer may make a purchase or
sale of an investment instrument without prior board approval if the action
conforms to the provisions established in this administrative
regulation.
(2) The
staff investment personnel employed by the board under
KRS
161.430(1) may be delegated
transaction responsibilities under the supervision of the chief investment
officer and the executive secretary.
(3)
(a)
Contracts with contracted investment counselors employed under
KRS
161.430(1) shall be on a
fiscal year basis for twelve (12) month periods, except that contracts entered
into on or after the start of the fiscal year shall not extend beyond the end
of the fiscal year in which the contract is entered.
(b) The system may invest in either
separately managed accounts or commingled funds.
(c) The investment committee shall make
recommendations to the board regarding employment of investment counselors and
the renewal or nonrenewal of contracts.
(d)
1. The
system may utilize the services of a consultant to advise the investment
committee, as well as to assist in evaluating the effectiveness of investment
counselors.
2. A consultant may
advise the investment committee with regard to asset class allocation and the
combined effect of the various portfolios on the system's overall risk and
expected long-term return.
(e) Investment counselors shall provide
reports documenting their results at least quarterly and meet with the
investment committee if requested.
(f) An annual report on the performance and
service of each investment counselor shall be provided to the board with
recommendations from the investment committee.
(4) The following procedures shall be
followed with regard to all investment transactions, whether internally or
externally managed:
(a) The board shall be
provided a quarterly report reflecting complete record of each investment
transaction that occurred during that quarter;
(b) The investment committee shall be
provided a complete record of each investment transaction or holding;
(c) The staff shall maintain a file of
investment directives that indicates the committee's separate review of each
specific long-term investment; and
(d) An "authorization for investment" shall
be approved by the executive secretary or the chief investment
officer.
Section
2. Asset Allocation.
(1) In order
to preserve the assets of the system and produce the required rate of return
while minimizing risk, assets shall be prudently diversified among various
classes of investments.
(2) In
determining asset allocation policy, the investment committee and the board
shall be mindful of the system's liquidity and its capability of meeting both
short and long-term obligations.
