Copyright © 2002, United States Conference of Catholic Bishops, Inc. All rights reserved.
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XIV. Investments

All institutions with investments should develop written investment policies governing significant investment criteria for each class of funds being invested. Among the matters which should be included in the investment policy are the following:

• Asset allocation – setting the minimum and maximum amount of each asset class, (e.g. fixed income, small cap stock, mid cap stock, large cap stock, foreign equity, foreign debt, etc.) that the fund may hold
• Expected investment return – usually this will be expressed as a comparison to a specified benchmark or as a percentage above a standard such as the consumer price index and will include a time frame over which the return will be measured, usually a period of several years
• Diversification – restrictions on the size of an investment in a particular company and industry to assure that the portfolio remains diversified
• Quality Ratings – minimum quality ratings acceptable for investments. This is particularly applicable to fixed income investments but can also apply to the minimum market capitalization necessary for investing in the stock of publicly traded companies
• Social Responsibility guidelines – a sample of the guidelines for a socially responsible investment policy are included later in this section

Other matters that should be considered in preparing any written investment policy or guidelines include, 1) what is the purpose and the priorities of investing the funds, 2) once the purpose and priorities are established, what is the acceptable level of risk the diocese is willing to take in investing the funds, 3) will the funds or the earnings be used for any cash flow needs?, 4) does the diocese have any investment style preferences?, and 5) are the funds part of a program that is subject to ERISA?