INVESTMENT POLICY STATEMENT - Cra-online

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INVESTMENT POLICY STATEMENTForCOLORADO RETIREMENT ASSOCIATIONRevised August 22, 2019Prepared with the Assistance ofInnovest Portfolio Solutions LLCRevised 8-22-19

TABLE OF CONTENTSPagePLAN SUMMARY . 1KEY INFORMATION . 2Name of Plan . 2Plan Sponsor . 2Governing Board . 2Type of Plan. 2PURPOSE OF INVESTMENT POLICY STATEMENT . 3STATEMENT OF ASSOCIATION OBJECTIVES . 4INVESTMENT RESPONSIBILITIES . 5DELEGATION OF AUTHORITY . 5RESPONSIBILITY OF PARTICIPANTS . 6RESPONSIBILITY OF THE INVESTMENT CONSULTANT (CONSULTANT) . 6GUIDELINES AND INVESTMENT POLICY . 7TIME HORIZON . 7RISK TOLERANCES . 7PERFORMANCE EXPECTATIONS . 7ASSET ALLOCATION CONSTRAINTS. 7INVESTMENT OPTIONS. 8BOOK VALUE FUND . 8MONEY MARKET FUND . 8CORE FIXED INCOME . 8LARGE CAP CORE EQUITY . 8LARGE CAP GROWTH EQUITY . 8LARGE CAP VALUE EQUITY . 8MID CAP CORE EQUITY. 9MID CAP GROWTH EQUITY . 9SMALL CAP CORE EQUITY . 9SMALL CAP VALUE EQUITY . 9GENERAL EQUITY . 9INTERNATIONAL GROWTH EQUITY . 9INTERNATIONAL VALUE EQUITY. 9TARGET DATE PORTFOLIOS.10SECURITIES GUIDELINES FOR THE BOOK VALUE FUND .12ASSET ALLOCATION .12GUARANTEED INVESTMENT CONTRACT LIMITS .13CORPORATE BOND LIMITS .13OTHER ASSET LIMITS .13CERTIFICATES OF DEPOSIT .13LIQUIDITY POLICY FOR THE BOOK VALUE FUND .16INTRODUCTION.16LIQUIDITY .16SELECTION OF INVESTMENT MANAGERS/MUTUAL FUNDS .15CONTROL PROCEDURES .16DUTIES AND RESPONSIBILITIES OF THE INVESTMENT MANAGERS/MUTUAL FUNDS .16DISCLOSURE TO PARTICIPANTS .17TARGET DATE PORTFOLIOS.1882

Fees and Expenses .19Asset Allocation .19Modifications to the Pension Portfolios .19Rebalancing .19CONTRIBUTIONS, TRANSFERS AND ALLOCATIONS .20Contributions .20Transfers and Allocations Among Funds .20Electronic Transfers .20Special Restrictions on Transfers .21MONITORING OF INVESTMENT MANAGERS/MUTUALFUNDS .22WATCH LIST GUIDELINES-QUALITATIVE FACTORS .22PERFORMANCE OBJECTIVES .23MONITORING PROHIBITED TRANSACTIONS & COSTS .253

PLAN SUMMARYThe Colorado Retirement Association (CRA) is an association of local governmentsformed pursuant to Colorado Statute (C.R.S. § 24-54-101 et seq.) to provide a retirementsystem for an Association of Colorado counties, municipalities, and special districts.The CRA Retirement Plan is a formal pension plan adopted to provide income afterretirement for eligible officials and employees of member counties, municipalities andspecial districts. Retirement benefits through CRA’s plan are in addition to those providedunder the Federal Social Security system.The retirement plan adopted by CRA is established pursuant to I.R.C. 401(a) and is termeda “defined contribution” plan.Pursuant to state statute, the mandatory contribution made by the employing entity mustbe matched by the employee. The Retirement Plan provides for a minimum contributionof 3% with no maximum limit.A “voluntary contribution” can be made by payroll deduction, after federal and state taxeshave been paid on the compensation, i.e. this contribution is made from “after-tax” dollars.The maximum allowable contribution that a participant may make is an additional 10% ofthe person’s yearly gross compensation.In addition, CRA also offers entities the option of adopting its Deferred Compensation Planestablished and administered pursuant to section 457 of the Internal Revenue Code.Contributions to this plan are made from “before-tax dollars.” Due to changes made to thetax code by The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA),annual contribution rates are as follows:Year20112012201320142015201620172018Amount 16,500 17,000 17,500 17,500 18,000 18,000 18,000 18,500Rev. 8/22/191

Key InformationName of Plan:Colorado Retirement Association (CRA) Retirement Plan andDeferred Compensation PlanPlan Sponsor:Colorado Retirement Association751 SouthPark DriveLittleton, CO 80120Plan Record keeper: Empower Retirement8515 E. Orchard RoadGreenwood Village, CO 80111Association IRS Tax Identification: 84-6070776Governing Board 2 members non-elected county employees elected by County Employees 2 members are registered electors of Member Counties chosen by the Board(s) ofCounty Commissioners whose Counties are Association Members 2 members are representatives of a municipal or political subdivision ParticipatingEmployer and shall be elected by those employers Treasurer of the most populous countyType of Plan:401(a), 457Current Net Assets (as of March 31, 2018):Participant Directed Investment Options:Frequency to Change Investment Options:Self-Directed Brokerage 1,632,392,402YesDailyYesInvestment Options:International EquitySmall Cap EquitiesMid Cap EquitiesLarge Cap EquitiesTarget Date PortfoliosCore Fixed IncomeHigh YieldMoney MarketBook ValueRev. 8/22/192

PURPOSE OF INVESTMENT POLICY STATEMENTThe purpose of this Investment Policy Statement (IPS) is to assist the Colorado CountyOfficials and Retirement Association (CRA) Governing Board (Board) in effectivelysupervising, monitoring and evaluating the investment options of CRA plan assets. TheBoard has the authority to establish and monitor the menu of alternative variableinvestment assets and oversee the investment of CRA Book Value assets. The CRAinvestment program is defined in the various sections of the IPS by: Stating in a written document the Board’s attitudes, expectations, objectives, andguidelines in the investment of all CRA assets. Setting forth an investment structure for managing all CRA plan assets. Thisstructure includes various asset classes and investment management stylesdesigned to give Participants the ability to produce a sufficient level of overalldiversification and total investment return over the long-term. Developing a strategy to provide for dynamic, competitive solutions, innovativeoption design, and vendor flexibility to help ensure that participants are given thenecessary framework to meet their goals. Providing guidelines for each investment portfolio that controls the level of overallrisk and liquidity assumed in that portfolio so that all CRA assets are managed inaccordance with stated objectives. Encouraging effective communications between the Board, Executive Director, theinvestment consultant, the investment managers/mutual funds, and theparticipants. Establishing formalized criteria to monitor, evaluate and compare the performanceresults achieved by the investment managers/mutual funds on a regular basis andprovide a method by which changes are made. Complying with all fiduciary, prudence and due diligence requirements thatexperienced investment professionals would utilize, and with all applicable laws,rules and regulations from local and state political entities that may impact CRAassets.This IPS has been arrived at upon consideration by the Board of the financial implicationsof a wide range of policies, and describes the prudent investment process that the Boarddeems appropriate.Rev. 8/22/19

STATEMENT OF ASSOCIATION OBJECTIVESThe objectives of CRA have been established in conjunction with a comprehensive reviewof the current and projected financial requirements. The objectives are:(1)To have the ability to pay all benefit and expense obligations.(2)To maintain flexibility in meeting the future needs of the participants.(3)To maximize return within reasonable and prudent levels of risk byproviding investment options which cover a broad range of risk and returncharacteristics.(4)To control costs of administering the plan and managing the investments.(5)To undertake all transactions solely in the interest of the participants andbeneficiaries.In general, it is understood that all benefit, funding, accounting, and investment policiesreflect current and foreseeable economic and market conditions, as well as any applicableaccounting and statutory requirements. It is intended that this policy statement bereviewed, and updated at least annually. Any change to the IPS will be communicated inwriting on a timely basis to all interested parties.Rev. 8/22/19

INVESTMENT RESPONSIBILITIESThe Board is responsible for the prudent administration of CRA with specific responsibilitieswhich include: Design of plan investment platform; establishing investment policy objectivesand guidelines; prudent selection of investment managers/mutual funds; and ongoingmonitoring. The Board shall contract with a consultant to assist in these responsibilities.Delegation of AuthorityThe Governing Board of CRA is a fiduciary, and is responsible for providing the investmentframework and monitoring the investment management of CRA assets. As such, the Boardis authorized to delegate certain responsibilities to professional experts in various fields.These include, but are not limited to:1.Investment Management Consultant (Consultant). The Consultant may assist the Boardin: analyzing current position, designing optimal structure, formalizing investment policy,implementing policy, and monitoring and supervising.2.Investment Manager (Manager)/Mutual Fund. The Investment Manager has discretionto purchase, sell, or hold the specific securities or products that will be used to meetCRA’s investment objectives. Investment Managers include mutual funds.3.Custodian. The Custodian will physically (or through agreement with a sub-custodian)maintain possession of securities owned by CRA, collect dividends and interestpayments, redeem maturing securities, and effect receipt and delivery followingpurchases and sales. The Custodian may also perform regular accounting of all assetsowned, purchased, or sold, as well as movement of assets into and out of CRA accounts.4. Additional specialists such as attorneys, auditors, actuaries, administrators and othersmay be retained by the Board to assist in meeting its responsibilities and obligations toadminister CRA assets prudently.5. Third Party Administrator/Recordkeeper. A “TPA”/recordkeeper will track individualparticipant balances and process participant contributions, disbursements, andtransfers. The recordkeeper will reconcile participant balances with trust accountbalances to maintain alignment. The recordkeeper will also perform testing andproduce management reports that ensure Plan compliance with all laws andregulations.The Board will delegate day to day investment decisions to investment managers/mutualfunds and they will be held responsible and accountable to achieve the objectives hereinstated.Rev. 8/22/195

If such experts retained are also deemed to be fiduciaries, they must acknowledge such inwriting. All fees for such experts must be customary and reasonable, and may be borne byCRA as deemed appropriate and necessary.Responsibility of ParticipantsUsing the basic principles of strategic asset allocation, select a combination of managersbased on the participant’s unique time horizon, risk tolerance, return expectation, and assetclass preferences.Responsibility of the Investment Consultant (Consultant)The investment consultant’s role is that of an advisor to the Governing Board of CRA.Investment guidance concerning the investment management of CRA assets will beoffered by the consultant, and will be consistent with the investment objectives, policies,and constraints as established in this statement. Specific responsibilities of the consultantmay include:1.2.3.4.5.Assisting in strategic planning and asset allocation strategies.Assisting in the development and periodic review of investment policy.Evaluate products and services and conduct manager searches as needed.Coordinate and negotiate custody, brokerage and other investment related vendors.Monitoring the performance of the investment managers to provide the Board with theability to determine the progress toward the investment objectives.6. Notify the Board of an investment manager’s/mutual fund’s failure to meet performancecriteria and recommend corrective action.7. Communicating matters of policy, investment manager/mutual fund research, andinvestment manager/mutual fund performance to the Board.8. Reviewing CRA investment history, historical capital markets performance and thecontents of the IPS with any newly appointed members to the Board.9. Reporting, on a timely basis, quarterly investment performance results.10. Analyze and review Participant communication program, as needed or requested.Rev. 8/22/196

GUIDELINES AND INVESTMENT POLICYTime HorizonSince the accounts are participant directed, there is no time horizon expressed for the totalfund. Choices will be offered that provide participants with a wide variety of time horizonsdepending on the participants’ unique needs. However, since retirement funding is themost important retirement goal, there is a desire to have quality investment alternativesthat can provide participants with favorable long-term returns.Risk TolerancesThe Board recognizes the difficulty of achieving the Plan's investment objectives in lightof the uncertainties and complexities of the investment markets. The Board alsorecognizes that some risk must be assumed to achieve CRA’s long-term investmentobjectives.In establishing the risk tolerances of the IPS, the ability to withstand short and intermediateterm variability were considered. To minimize these risks, any investment decisions willbe viewed with a goal of diversification in an attempt to control risks and minimize losses.The Board has made a conscious decision to provide participants with a broad array ofinvestment choices so they have alternatives that provide a variety of risk and return levelsregardless of time horizon. The Board w

The Colorado Retirement Association (CRA) is an association of local governments formed pursuant to Colorado Statute (C.R.S. § 24-54-101 et seq.) to provide a retirement system for an Association of Colorado counties, municipalities, and special districts. The CRA Retirement Plan is a formal pension plan adopted to provide income after

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