Trust Fund assets are managed through two different investment pools or funds. Please see this memo regarding the transition to SWIB and fund changes that occurred April 1, 2018.
Investment objective: achieve reasonable, attainable and sustainable returns, net of expenses, over and above the rate of inflation; appropriate for endowments and fully expendable funds with a long-term horizon; distributes 4% per year for current spending purposes. Management of the Long Term Fund is being provided by State of Wisconsin Investment Board (SWIB) as of April 1, 2018. While the overall investment objective remains the same, the asset allocation and investment strategies determined by SWIB will vary slightly as compared to the Long Term Fund prior to that date.
Assets invested in the Long Term Fund receive an annual spending rate distribution of a set percentage (currently 4%) of the average market value over the prior twelve quarters (three years). The spending rate percentage is reviewed annually by the Office of Trust Funds and the Business and Finance Committee of the Board of Regents. This Fund is valued quarterly, allowing for deposits, withdrawals, and transfers on a quarterly basis.
Investment objective: provide competitive short-term interest income and safety of principal; used to receive spending distributions from the Long Term Fund and for other fully expendable funds with a shorter-term horizon, and from which all expenditures are made.
The investment guidelines for the State Investment Fund allow investment in the following categories: Treasuries/Agencies/FDIC Insured Bank Deposits/Repurchases Agreements (50-100%); Commercial Paper and Corporate Notes (0-30%); CDs/Time Deposits (0-30%); and Yankee/Euro CDs/Time Deposits (U.S. Dollars) (0-10%).
For a more detailed overview of the Office of Trust Funds and the investments, please see the Fact Sheet as of December 1, 2018.