The Road to the SDGs

PURPOSE X The shift towards a new Investment Management Framework is characterised by the adoption of a fiduciary asset management model for managing the capital of IsDB-related funds, as stipulated by the P5P. This shift imparts greater transparency to the objectives of IsDB’s investment arm and ultimately ensures a focus on delivering superior risk-adjusted returns to enable greater operational spending. X The Framework will contribute to de- risking IsDB’s balance sheet and aims to improve investment returns in line with global benchmarks. X IsDB developed new investment policies to enhance strategic asset allocation, bearing in mind diversification factors by managing risk. The policies paved the way for new investments in growth asset classes using external fund managers, introducing better investment governance processes and aiming to deliver superior return, thus improving the IsDB-related fund net income and subsequently the operations headroom. METHOD External fund managers X The investment policy statement of each fund will include multiple asset classes, each having sub-classes, that will allow the overall portfolio to reach an efficient level of diversification. This means that when choosing an asset class and constructing a portfolio, care is taken to allocate an appropriate risk budget and to be clear on the source of risk i.e. market, credit, sector etc. X Within each asset class, a portfolio of multiple external fund managers (with different investment strategies, investment styles, risk factors, geographies, sectors and currency exposures) will be constructed. Both the first and second level are the remit of IsDB. A third level of diversification is for each external manager to construct a well-diversified portfolio of securities to fulfil their investment mandates. IsDB will search for best- in-class external fund managers. This process is a lengthy one of due diligence, analytics and manager meetings to garner sufficient confidence in the ability of the fund manager to achieve IsDB’s investment goals. So far, IsDB has executed two major individually managed accounts (IMAs) with Franklin Templeton (STI Transform Fund) and Cambridge Associates (Waqf Fund). X IsDB selected Franklin Templeton to manage a substantial part of the STI Transform Fund. This was done through a rigorous request for proposals (RFP) and due diligence process. Franklin Templeton was mandated to manage a multi-asset portfolio New Investment Management Framework A key component of the President’s Five-Year Programme is forging IsDB investment arm into an alpha- generating fiduciary asset management function to manage the capital resources of IsDB-related funds and the OCR equity portfolio IsDB’s investment arm has a renewed business model in managing investments of IsDB trusts, endowment funds and the OCR equity portfolio with the objective of achieving superior risk-adjusted returns, contributing to IsDB’s broader mission and the P5P in all investment- related matters [ 202 ] SDGs