The objective of MPSIF is to maximize total return consistent with the risk appropriate for an endowment fund. The goal is to maintain real capital preservation and have some real growth.
Each sub-fund operates under certain investment guidelines. For example, each fund may purchase U.S. securities including: stocks, bonds, money market instruments, mutual fund shares as well as foreign stocks and ADRs that do not incur special tax gains or losses. The funds may not acquire: commodities, derivative securities except under restricted circumstances, real estate, non-investment grade debt or penny stock securities, securities or other instruments that are not readily marketable (such as partnership interests). The funds may not borrow or lend funds or securities, or use any investments as collateral. Buying on margin is prohibited.
In December 2004, the MPSIF Executive Committee established operating guidelines for maintaining a balance among the various MPSIF funds. The guidelines are:
- Rebalancing is triggered when any portfolio deviates by more than 10 percentage points from the initial policy portfolio allocation (i.e. <15% share or > 35% share).
- The deviation must be sustained for at least 3 months as measured on June 30, July 31 and August 31 of any fiscal year.
- The rebalancing date should be September 1 to minimize reporting problems in the Annual Report (FY ending August 31).
- More than one sub-fund may own the same security, but no more than 3% of the total assets in MPSIF may be invested in any single company.