Investment and Advice Services for Not-for-Profit Organisations
1. MORGAN STANLEY WEALTH MANAGEMENT 1
Investment and advice
services for not-for-profit
organisations
2. The noble efforts
of not-for-profit
organisations make
our world a far
brighter place.
We’re proud of our clients and their work.
We’re dedicated to providing them with
advice, guidance and support designed to
contribute to their success – both
financial and altruistic.
3. MORGAN STANLEY WEALTH MANAGEMENT 1
Table of contents
Building the foundations of success 2
Disciplined advice process 5
Robust investment process 6
Sustainable investing 9
Governance 10
Reporting capabilities and technology 12
Outsourced expertise 13
4. 2 MORGAN STANLEY WEALTH MANAGEMENT
Building the foundations
of success
The not-for-profit sector is incredibly diverse.
It consists of organisations of all sizes, cuts across
geographic boundaries and sets out to solve a broad
set of social and environmental issues.
While every not-for-profit organisation is unique, they’re
all powered by people who are driven by a desire to
make a difference. In the most functional organisations
this passion is complemented by a wide variety of skills,
experience and expertise.
For many not-for-profit organisations however, investment
management isn’t a core skill. And yet it can be a critical
component of success. Continuity of funding is vital and
professional investment management can help deliver
a consistent income stream. This has never been more
important given the current low return environment and
increasing competition for donor funds.
In addition, not-for-profit organisations are expected
to adhere to the highest possible standards of probity.
Professional management of an endowment ensures
fiduciary duties are fulfilled and there is transparency and
accountability regarding where funds are invested (using
best practice environmental, social and governance filters).
Morgan Stanley’s commitment to the not-for-profit sector
Our team are highly experienced in managing the investments of Australian charities, trusts, not-for-profit and religious
organisations and we work with more than 150 clients in these sectors. Our clients operate in areas of social welfare,
health and medicine, education, aged care, sport and philanthropic trusts. The table below provides examples of some
of the clients we currently work with and some of the services we have provided.
Client description Scope of work Outcome achieved* How returns were maximised
Large aged care
provider
Management of a conservative
bond and fixed income portfolio
Returns well in excess of cash
rates with very little volatility
Via a quality bond and term
deposit portfolios, with active
management of maturities
Social welfare
organisation
On-going management of
a portfolio of domestic and
international assets
Helped rebuild cash flows,
advised the board on the need
for reduced spending, whilst
improving investment returns
Via a specifically constructed
investment portfolio with an
ethical overlay specifically
maximising franking credit.
Faith based
organisation
Continued management
of a multi-asset class investment
portfolio within a mandated
asset allocation model
Providing returns in excess
of the cash rate whilst
ensuring appropriate liquidity
requirements were met
Via a specifically constructed
investment portfolio across all
asset classes
Private school NFP
foundations and
benevolent funds
On-going management of
various school foundations
with investment portfolios
We continue to successfully
manage the school foundations
within the mandated framework
Via a specifically constructed
investment portfolio with an
ethical overlay specifically
maximising franking credits
* Past performance is not indicative of future performance.
5. MORGAN STANLEY WEALTH MANAGEMENT 3
Capability and global resources
For more than 80 years, Morgan Stanley has been a leader, innovator and partner for our clients. We have provided
security and comfort through the careful management and robust oversight of investment portfolios.
Morgan Stanley is one of the world’s
largest wealth organisations:
• 55,000 employees in 1,000
offices across more than 40
countries.
• 16,000 financial advisers.
• US$2 trillion in assets under
management.
Morgan Stanley has been awarded:
• Best Global Investment Bank for
2015 – Euromoney.
• Best Investment Bank in Asia for
2015 – Euromoney.
• Ranked number 1 in the 2016
Institutional Investor All-Asia
Research Team survey.
Morgan Stanley is the largest global
wealth manager in Australia:
• Five offices (Sydney, Melbourne,
Brisbane, Adelaide and Perth).
• 150 financial advisers and not-for-
profit specialists in each office.
• A$26 billion in wealth
management client assets.
Your advisers are supported
by one of the world’s strongest
investment organisations.
7. MORGAN STANLEY WEALTH MANAGEMENT 5
Disciplined
advice process
Your financial adviser works closely with
you to understand your needs while
maintaining the focus and discipline
necessary to guide your portfolio through
the most challenging market cycles.
SET FINANCIAL OBJECTIVES
Your financial adviser
meets with you to help
you develop an investment
strategy based on your
specific goals, time
horizon, liquidity needs
and tolerance for risk and
volatility as outlined in
your investment policy
statement.
DEFINE INVESTMENT
STRATEGY
Based on your input,
your financial adviser
recommends an asset
allocation model designed
to achieve desired return
outcomes within specified
risk parameters.
EVALUATE AND SELECT
INVESTMENTS
Your financial adviser helps
you implement your asset
allocation by selecting
appropriate investments
and constructing a properly
diversified portfolio.
ONGOING REVIEW
Your financial adviser
reports on your investment
performance and provides
advice on adjustments
to address changing
circumstances and
conditions.
8. 6 MORGAN STANLEY WEALTH MANAGEMENT
Robust investment
process
We adhere to a strict portfolio construction
methodology which is founded in a deep understanding
of client needs, emphasises the importance of asset
allocation, incorporates insight from a broad range of
sources, both proprietary and external, and is acutely
aware of the importance of risk management.
CASH
INTL.
SHARES
BONDSPROPERTY
CREDIT
AUST.
SHARES
CONSTRUCT IPS
AND INVESTMENT
STRATEGY
STRATEGIC AND
TACTICAL ASSET
ALLOCATION
IMPLEMENTATION
OF INVESTMENT
STRATEGY
ONGOING REVIEW
PROCESS
9. MORGAN STANLEY WEALTH MANAGEMENT 7
Rigorous filtering
process
Morgan Stanley delivers a rigorous
manager selection process that has
been refined over many years and is
designed to inspire confidence.
• Leading research and insights
– industry leading and award
winning research covering more
than 3,000 companies globally.
• Rigorous analysis – less than
10% of the universe of 14,000+
investment managers meet our
standards for platform inclusion.
• Robust governance – manager
decisions are governed by an
experienced committee that
meets at least twice weekly.
• Ongoing monitoring – investment
products and managers are
continually reviewed, with
multiple points of contact.
• Extensive library of research –
made available to clients and
their advisers.
Asset allocation strategy
Morgan Stanley firmly believes asset allocation is the most important
determinant of portfolio performance over the long term and as a result we
devote a significant amount of intellectual capital to the process. Our local
research team includes an asset allocation specialist who is responsible for
taking the broader insights delivered by Morgan Stanley’s global strategists and
economists and applying them to Australian market conditions and investors.
There are two key components of our asset allocation strategy.
Strategic asset allocation
Strategic asset allocation (SAA) takes a longer term view of asset class risk
and return characteristics with the objective of meeting clients’ risk tolerances
and return goals. We conduct a formal review of our SAA every 12 months.
Tactical asset allocation
Tactical asset allocation (TAA) seeks to exploit short term opportunities within
asset classes to add additional value above that of the rest of the market.
We conduct a formal review of our TAA on a quarterly basis; however, TAA
changes can be implemented at any time.
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Sustainable investing
At Morgan Stanley, we believe the solutions to global
challenges will be fuelled by private capital as much as
donor funds. Every investor has a role to play – even
organisations that operate in the not-for-profit sector.
Creating sustainable
client portfolios
We’re committed to constructing
client portfolios that deliver financial
goals as well as positive social and
environmental outcomes – and we
don’t believe you need to trade one
off against the other. We’re able
to cater for the full spectrum of
sustainable investing approaches.
Depending on client needs and
attitudes, we’re able to deliver
portfolios through:
• values alignment – intentionally
avoiding investments based on
specific criteria
• environmental, social and
governance (ESG) integration
– proactively considering ESG
criteria alongside financial analysis
to identify opportunities and risks
• thematic exposure – focusing on
themes and sectors dedicated
to solving sustainability-related
domestic and global challenges
• impact investing – allocating
funds to private enterprises
structured to deliver specific
positive social and/or
environmental impacts.
Institute for
Sustainable Investing
The Morgan Stanley Institute for
Sustainable Investing is dedicated
to accelerating the adoption of
sustainable investing, which seeks
to deliver both competitive financial
returns and positive environmental
and social impact.
Sustainable investing
The Institute develops and facilitates
access to innovative and scalable
financial products to enable adoption
of sustainable investing strategies
across investor types and asset
classes.
Thought leadership
The Institute produces and
develops informative analysis and
curates opinions from firm, industry
and issue experts to inform and
empower investors.
Capacity building
The Institute supports programs
and strategic partnerships that train
and develop the next generation of
sustainable investing leaders.
Local expertise
Locally, our head of research
and investment strategy for our
Australian wealth management
business – Nathan Lim – has a long
history and outstanding expertise
in sustainable investing. Prior to
joining Morgan Stanley, Nathan was
portfolio manager for Australian
Ethical Investments. Not only is
Australian Ethical Investments one
of the most respected managers in
the sustainable investing industry
but the fund Nathan managed was
recognised as Best International Fund
of the Year in 2014. Nathan has a
deep commitment to the inclusion of
environmental, social and governance
factors within financial analysis.
12. 10 MORGAN STANLEY WEALTH MANAGEMENT
Governance
The importance of appropriate governance structures can’t
be overstated. If you need additional expertise or a fresh
perspective, our specialists can help.
Your investment policy statement
It’s important to establish an investment policy statement
in order to provide structure to the decision making
process.
Today’s increasingly complex investment landscape
places significant pressure on the fiduciaries overseeing
the investment pools of charities, endowments and
foundations. Many are not only re-examining their current
investment decision making practises, but also looking to
ensure that those practises allow for enough flexibility in
implementation to maximise the likelihood of investment
success. Recognising the increasing importance of the
investment portfolio success to the needs of the broader
organisation, more fiduciaries are taking a holistic view,
spending as much time on issues such as risk management,
good governance and spending policy as on asset
allocation and investment strategy. A clearly articulated
investment policy statement serves as the foundation of
an integrated and aligned oversight process.
What an investment policy statement is
An investment policy statement is a client-specific
document designed to address the objectives, constraints,
unique circumstances and overall oversight procedures
that govern investment-related activities within the
investment programs of the organisation. A good
investment policy statement will clearly define the
responsibilities of all parties involved including: the
trustees, the investment committee, the investment
advisor, and the custodian. It will present the portfolio’s
financial objectives within the context of how much risk
the trustees are willing and able to bear. A well written
investment policy statement will typically address the
following subjects:
• Purpose and scope.
• Definition and duties.
• Objectives.
• Strategic asset allocation framework.
• Rebalancing and spending policy.
How we can help
Having a well-defined and clearly-articulated investment
policy statement is vital in today’s investment landscape.
It fills a vital role in helping to lay the foundation for
your overall governance structure and ensures that all
fiduciaries are fulfilling their obligations, resulting in an
increased probability that you will successfully meet your
objectives. Our team has extensive experience working
with similar clients in this regard.
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Safeguards
Part of your fiduciary duty is ensuring your partners
adhere to the highest possible governance standards.
Morgan Stanley maintains a comprehensive corporate
governance protocol, which ensures compliance with our
general obligations under the Corporations Act 2001,
ASIC Market Integrity Rules and Rules of the ASX Group.
Our Responsible Executives supervise the design,
implementation, functioning and review of all operations
and processes for compliance with regulatory requirements.
Morgan Stanley has an established Board that is
responsible for overseeing our risk management systems,
internal controls and processes and external audit.
Morgan Stanley has a range of practical processes
designed to further protect the interests of clients. We
have implemented a tight control framework including
a robust system for ensuring the assets purchased on
behalf of clients align to our understood and agreed
assessment of their risk profile and objectives. This is
done on account opening and on a daily basis to ensure
transactions and market movements don’t inadvertently
push a client into a risk position that is inappropriate for
them based on our understanding of their circumstances.
WE HAVE AN ARRAY OF CONTROL SYSTEMS, INCLUDING:
portfolio analytics,
modelling and
reporting
trade execution and
settlement controls
client account
management
processes
regulatory
compliance
framework
proprietary risk
management
systems designed to
ensure suitability of
client assets
14. 12 MORGAN STANLEY WEALTH MANAGEMENT
Reporting capabilities
and technology
Morgan Stanley has invested heavily in leading proprietary
technology solutions to provide both advisers and their
clients the tools they need to reliably and efficiently
monitor and manage investment portfolios.
Online, web based investment
portfolio management services
Our client-facing technology provides you with the ability
to monitor your portfolio holdings, view transactions,
customise reports, create consolidated account groups,
and review monthly statements. Clients can also view
intraday market value changes, create ‘watch lists’ and
access market data and research.
We are happy to provide more detailed information on
our platforms and technology upon request.
Quality reporting documentation
Safeguarding the financial health of your organisation is
one of the most important responsibilities the board of a
not-for-profit organisation will face. As part of our service
to you, we will provide reporting that will help you meet
your obligations and operate in accordance with your
investment policy statement.
Portfolio reports are updated daily, and can be accessed
via a secure website at any time. We will also provide
detailed monthly, quarterly and annual audited reports
that will allow you to review the ongoing investment
performance.
Our standard reporting includes:
• portfolio valuation
• asset class allocation
• portfolio performance
• investment movements
• income and tax credits
• transaction history
In addition, we’re able to provide you with multi-currency
reporting for your international investments. We’re happy
to provide samples of our different reporting formats
on request.
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15. Outsourced
expertise
Through our work with not-for-profit
groups, we have built an extensive
network of specialist resources that
we’re able to refer our clients to,
or engage on their behalf.
In the current challenging and competitive environment, you must look
to continually strengthen your governance, increase the efficiency of your
operations and achieve consistently improving, measurable results.
At Morgan Stanley, we serve as an experienced and capable ally in these
efforts. Our team is able to engage a broad range of specialists to help not-
for-profit organisations refine and implement their strategies. We can help you
address some of the most pressing challenges facing your organisation.
At Morgan Stanley, we have previously helped our clients engage specialist
resources to help with a range of needs, including:
• Professional leadership
• Board development and governance
• Outsourced administration services
• Formulating strategy
• Improving governance
• Streamlining operations
• Building networks and connections
• Fundraising techniques
