Friday, April 20, 2012

Investment Guidelines - Domestic Equity Investing

To the individual investor, do you have investment guidelines per domestic equity investing? Below are some examples (and thoughts). Pension funds, due to sophisticated asset allocations, can require their domestic equity managers to be virtually fully invested; these managers do monitor their largest holdings prudently.

Cash Exposure
  • LASERS domestic equity portfolios are expected to be fully invested; No more than 10% of a manager’s domestic equity portfolio may consist of cash or cash equivalents - Louisiana State Employees' Retirement System (LASERS), 8/25/11
  • The amount of cash and cash equivalents held in the domestic equity portfolio generally shall not exceed 5 percent of the total portfolio except during periods of cash contributions or withdrawals - Illinois Municipal Retirement Fund (IMRF), 2/24/12
Largest Holding(s)
  • No single holding shall account for more than 6% of the allowable equity portion of the portfolio at market value, or 150% of a stock’s weighting in the style benchmark against which the manager is measured, whichever is larger - LASERS, 8/25/11
  • No individual security shall comprise more than 15 percent of a manager’s portfolio market value without Fund approval; Generally, no individual security shall comprise more than 5 percent of the total domestic equity portfolio - IMRF, 2/24/12