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A decision made 22 March 2010 regarding: States of Jersey Common Investment Fund - lodging of draft regulations.

Decision Reference: MD-TR-2010-0047
Decision Summary Title:	States of Jersey - Common Investment Fund		Date of Decision Summary:	18 March 2010
Decision Summary Author:	Strategic Investments Manager, Treasury		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	States of Jersey - Common Investment Fund		Date of Written Report:	18 March 2010
Written Report Author:	Strategic Investments Manager, Treasury		Written Report : Public or Exempt?	Public
Subject: Lodging of Draft Regulations for the creation of the States of Jersey - Common Investment Fund.
Decision(s): The Minister for Treasury and Resources decided: § To lodge an amendment to the Public Finances (Transitional Provisions) (No.2) Jersey Regulations 2010 in respect of the creation of the States of Jersey - Common Investment Fund and to request the Greffier that this be debated at the earliest opportunity.
Reason(s) for Decision: To enable States Funds to be pooled for investment purposes.
Resource Implications: There are no additional resource implications.
Action required: The Treasury and Resources Business Manager to forward the attached Regulations to the Publications Editor of the States Greffe and request that they be lodged and scheduled for debate at the earliest opportunity.
Signature:		Position: Senator P F C Ozouf Minister for Treasury and Resources
Date Signed:		Date of Decision:

States of Jersey Common Investment Fund - lodging of draft regulations

Treasury and Resources

Ministerial Decision Report

STATES OF JERSEY - COMMON INVESTMENT FUND

1. Purpose of Report

To consider lodging draft Regulations, under Article 6(2) of the Public Finances (Jersey) Law 2005, to create the States of Jersey - Common Investment Fund and pooling of States Funds (including Special Funds and Trust Funds) monies.

2. Background

As part of the States responsibility for investment strategy and policy development, the need for the implementation of a States of Jersey – Common Investment Fund was identified in the Treasury and Resources 2010 Business Plan.

The States of Jersey – Common Investment Fund will pool together assets from a number of States Funds and jointly invest and manage the underlying assets, so they can continue to invest in accordance with their own agreed asset allocations as published in their Investment Strategies. This allows the Funds to access a number of benefits whilst retaining their ability to separately determine their own asset allocation and risk profile.

The States Funds will benefit from cost savings, the potential for improved rates of return through economies of scale and improved risk management through access to a diversified range of investments. Further, the management and monitoring of the Funds and investments will be simplified, which will reduce the administration of these funds.

3. The Common Investment Fund

In developing this Fund, the Treasury and Resources department has sought advice (including advice from the States Investment Advisor).

The Fund will be an informal arrangement between the States Funds where the assets (as permitted under legislation / trust deeds) are pooled together into one common fund for joint investment and management purposes. The Fund will be an administrative management vehicle and not a separate legal entity or Separately Constituted Fund. It will provide additional benefits of simplicity in its set up and operation and reduced annual running costs.

The Fund will not be marketed to any public organisations and will only be open to investment from States Funds (to include Special Funds and Trust Funds).

The participating funds will hold units within the different types of investments offered by the Fund; for example equities, bonds, property, cash. Each participating Fund’s investment will be in line with their individual Investment Strategy. The overall investment portfolio will then be managed by one set of investment managers and the Common Investment Fund is managed by one custodian.

The diagram below demonstrates the basic set up and relationship of the States of Jersey – Common Investment Fund with individual States Funds and Investment Managers.

* Note: The following pools are examples of investment pools purely for information purposes.

The underlying assets of each asset class are effectively pooled for the purposes of investment management. An investment manager will therefore manage each of the individual pooled funds.

The size of each States fund’s share of the pool is determined by the number of units it holds. The number of units held by each participant is determined by the proportion that the value of their assets bears to the total value of the assets in the pool at the time when the contribution of its assets is made.

As the participating funds supply the capital to be invested by the Fund, the participating funds will have the same rights and obligations as one another. Each participating fund will be allocated a proportion of the investment income, expenses and the capital gains and losses which is in line with their proportional holding of the total units in the specific pool.

This allows the participating funds to access a number of benefits, whilst retaining their ability to separately determine their own asset allocation and risk profile. The Minister for Treasury and Resources will continue to be responsible for the Investment strategies for each Fund and the Investment strategy for the States of Jersey – Common Investment Fund.

4. Recommendation

It is proposed that the Minister for Treasury and Resources approve the following;

· Lodging of the draft Regulations under Article 6(2) of the Public Finances (Jersey) Law 2005 in respect to the creation of the States of Jersey - Common Investment Fund.

· Request that this be scheduled and debated at the earliest opportunity.

5. Reason for Decision

To enable States Funds to be pooled for investment purposes.

6. Resource Implications

The costs associated with the implementation and operations of the States of Jersey – Common Investment Fund will be met from existing budgets and the relevant funds.