Investment Committees Should Follow Best Practices

Denver Business Journal - by Richard Todd

Investment committees have the responsibility to oversee assets belonging to others, such as retirement plan participants or nonprofit organizations. All investment committee members have the immense role of serving as fiduciaries, including the obligation to ensure that organizations meet their financial obligations.

Investment committees have reacted in various ways to the rough markets of the past year. Some committees froze, doing nothing despite the markets’ massive dislocations, and quickly changing risks and opportunities.

Other committees panicked in the middle of the meltdown and raised large amounts of cash (typically near the market bottom). Those committees now are faced with the issue of what to do next, as equity markets have rebounded and money-market yields are at record lows.

Sound investment committees were active, yet reasoned, in their approach in the past year. Investment objectives were revisited, portfolios were rebalanced and studies were conducted to identify risks and opportunities in the changed market environment. Accordingly, portfolios were thoughtfully adjusted.

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