January/February 2002

Asset Allocation Changes in Operating Investment Program

The Investment Committee and the Board of Stewardship Trustees of Catholic Health Initiatives approved changes in the asset allocation and investment pool structure of the organization’s operating investment program.

The changes follow a comprehensive asset allocation study conducted by treasury staff with the assistance of Summit Strategies Group, the investment consultant to Catholic Health Initiatives. "This study was done in response to the improved financial performance and position of Catholic Health Initiatives," said Geraldine Hoyler, CSC, senior vice president of finance and treasury.

Previously, operating investment program assets were evenly split between equities and fixed income investments. The new asset allocation mix is 53 percent equities, 37 percent fixed income investments and 10 percent alternative investments. The alternative investments will be allocated six percent to hedge funds and four percent to private capital. "Alternative investments are widely used by many institutional investors and improve the expected risk/return characteristics of the portfolio due to a low correlation with equities and fixed income investments," said Sister Geraldine. "A similar asset allocation study conducted for the Catholic Health Initiatives Retirement Program in March 2000 also resulted in a 10 percent allocation to alternative investments."

The Catholic Health Initiatives Investment Report for the second quarter of fiscal year 2002 provides additional information on the new portfolio structure. Additional education materials are also available.

For more information, contact Jerome R. Judd, vice president of treasury services at jerryjudd@chi-national.org, or Jennifer Neppel, director of cash and investments, at jenniferneppel@chi-national.org.