Portfolio Structure NATOA 2007
The Trustees have been selected, the Trust Agreement is finalized, the Investment Policy has been created and the money sits in the Trust account. Where do we go from here? Many First Nations find themselves in the initial stages of the Trust Investment process facing a myriad of choices. The primary goal is to invest the trust portfolio to provide the
best benefits for the community. Chief and Council and the trustees must consider a number of issues. How is this money going to be invested? Who is going to manage the investment assets in the portfolio? How will the portfolio be managed? How will it be measured?
First Nations Trust Governance Framework
Trusts have been used for the past 20 years to facilitate payment of settlement funds from Canada under specific claim settlements. Much has been learned over this time period on the establishment and implementation of such trusts. How the trust is developed and, ultimately implemented, is dependent on the First Nation and how the First Nation develops and ultimately manages the Trust. There is, however, no "one-size fits all". In this paper, I will address some of the issues that need to be considered in developing the Trust with a primary focus on the management of the Trust.
Trust Agreement Investment Clauses And Putting The Team Together
All trust agreements contain clauses that outline what the permitted investments are for the trust. Many also contain schedules that define for example, what the credit rating of any bond investment must be or what equity markets the trust can invest in. Sometimes these clauses contain prohibitions and identify specific types of investments that cannot
be held in the trust. An example of investments that are often prohibited are direct investments in First Nation business or land.
In a trust, the Trustees have the power and the duty to invest the trust property so it is prudent and necessary for the trust document to provide some guidelines. In fact a trust agreement that did not include them would be considered incomplete. As a result we know we have to have them but the challenge is to figure out what should be in them.
Selecting an Investment Manager
Sooner or later all First Nations will need a professional investment manager to handle their investments. This means that you or other First Nation representatives will have to go through the process of selecting an investment manager from the qualified firms available.
There are a few basic ideas that should be incorporated into the search. The first is that you want the best possible manager you can hire that meets the First Nation's criteria. The second is that there should be no geographical restrictions, which means the councilor can come from anywhere in the country. It does not matter if they have an office across the street or 3,000 miles away, as long as they can be there when you need them.
Socially & Environmentally Responsible Mandates
What a wonderful idea to use your financial resources to improve social and
environmental conditions by making socially screened investment decisions.
What steps are necessary to do this successfully and what are the impacts to
your investment portfolio?
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