State Investment Policy; Investment Consultant.

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9-4-716. State investment policy; investment consultant.

(a) The board, in consultation with the investment funds committee, shall adopt investment policy statements for state funds and shall review those policy statements at least annually. These policy statements shall be subject to the following:

(i) The board may specify groupings of state funds for which separate investment policy statements are appropriate. At a minimum, those groupings shall include state funds for which there is a trust obligation, short term funds for operations and all other funds. The board may determine criteria under which certain funds shall be separately managed;

(ii) Nothing in this section shall be construed to prevent the state treasurer from pooling any state funds for investment purposes, including meeting cash flow requirements in accordance with approved investment policy statements.

(b) The investment policy statements shall include the following:

(i) Nominal return benchmarks;

(ii) Definition of risk and of return;

(iii) Risk tolerance;

(iv) Permissible investments and quality standards;

(v) Liquidity requirements;

(vi) Cash flow projections for the grouping of funds;

(vii) Procedures for selecting and dismissing investment managers when utilized;

(viii) Indices or benchmarks against which the returns will be measured;

(ix) Two (2) risk mitigation metrics for managing and mitigating the risks of investments consistent with the strategy specified in W.S. 9-4-715(d)(ii):

(A) One (1) metric shall specify the maximum percentage of monies in the state fund or state funds that may be invested in securities in consideration of all the factors developed for the fund's investment policy statement under this subsection; and

(B) One (1) metric shall measure risk in the state fund or state funds using a value at risk measurement technique or other similar risk measurement technique.

(c) The state treasurer, in consultation with the investment funds committee, shall develop and submit proposed investment policy statements for each grouping of state funds specified in subsection (a) of this section and may contract for assistance in developing proposals or in making suggestions for modifications to existing investment policy statements. The state treasurer shall report quarterly to the board and the investment funds committee regarding the performance of investments with respect to each grouping of state funds specified by the board under subsection (a) of this section and such other information as may be required by the board.

(d) The board:

(i) Shall procure the services of a qualified entity to evaluate:

(A) At least annually, the reasonableness and comprehensiveness of the investment policy statements required under this section;

(B) At least quarterly, the performance of the investments for each grouping based upon recognized indices and the reasonableness of the mix of assets in light of anticipated cash flow requirements and the investment policy statements;

(C) At least annually or when market conditions warrant a change or reallocation of investments, the risks of investing state funds using the metrics specified in the investment policy statements pursuant to paragraph (b)(ix) of this section and the risk profile under subsection (e) of this section.

(ii) Shall require competition to procure those services required under paragraph (i) of this subsection at least every four (4) years;

(iii) Shall receive an appropriation directed to the office of state lands and investments to be used to compensate the entity retained under paragraph (i) of this subsection for its services.

(e) In investing monies of a fund or account which may be invested in stock of a corporation or other equities, the overall risk profile of the investments, excluding any specific public purpose investment authorized or directed by the legislature, shall not materially exceed the risk profile of a reference portfolio that consists of seventy percent (70%) global equities and thirty percent (30%) domestic fixed income investments. The state treasurer after consultation with the investment funds committee shall submit to the board the committee's recommendations of specific benchmarks for the measurement of the portfolio risk characteristics. The specific benchmarks shall be determined by the board. Any provision of law which restricts the investment of a specific fund or account to a greater degree than the provisions of this subsection shall control over this subsection.

(f) Investments made in accordance with this section and W.S. 9-4-715 and policies adopted pursuant to this section shall be deemed to satisfy provisions of law which require funds to be invested in a manner to obtain the highest net return consistent with preservation of principal or the corpus of a fund.


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