In recent years, the EuroQol Research Foundation was not only scientifically, but also financially successful. This has enabled significant further investment into research, while maintaining sufficient reserves to guarantee the continuity of the Foundation. In times where significant interest was paid on cash deposits, it made sense to keep these reserves in relatively profitable savings accounts.
In 2018, in response to 0% bank interest rates, the Board approved a conservative, risk-averse investment policy that was ratified by the EuroQol membership. Since then, the policy has been updated now and then to address further changes in interest rates. As a consequence, the cash position of the Foundation has been reduced, while investments in bonds and stocks have increased. Therefore, the current investment policy is considered risk neutral. This memo formulates the revised investment policy for the EuroQol Group and its members
Investment policy for the EuroQol Research Foundation
1 Safety of assets is prioritized
This is the most fundamental requirement and follows the EuroQol Group’s recently adopted strategy to develop new measurement methods for health-related quality of life. The EuroQol Group and the EuroQol Research Foundation will therefore continue to generate revenue primarily through license rights. The aim is to generate a modest return on investment (2-4% higher than bank interest rates), in line with our risk-neutral investment policy.
2 Choice of investments should protect reserves from dramatic losses
Investments are preferably carried out in Euros, but investments in comparable liquid currencies such as British Pounds and US Dollars are possible to strengthen overall diversification. The investment portfolio might include government bonds and corporate bonds of good investment quality (BBB- and better). Shares and derivatives are allowed and should be within 50-75% of the total investment portfolio. The Group’s cash position is not considered part of this portfolio. The Group should also consider investing in index tracking funds, such as unit trusts or exchange-traded funds (ETFs) with low costs.
3 Investment decisions are taken by the Board
Investment decisions are not part of the daily routine, and therefore are not the responsibility of the Executive Director. Instead, this is a responsibility of the Board. In line with our Articles, the Executive Director has an advisory role. Investment decisions should be regularly on the agenda of the Board in the future. Professional investment expertise may be hired by the Board to manage part of the investment portfolio. The treasurer will make proposals for investment decisions, in cooperation with the Executive Director and with external experts based on the principles described above. The decisions will be made by majority votes of the Board.
4 For investment decisions, there is a strong preference not to consider companies known to be linked with any or all of the following:
- Production or sale of weapons that violate fundamental humanitarian principles through their normal use, including armaments and nuclear weapons
- Production of tobacco
- Serious or systematic human rights violations, such as murder, torture, deprivation of liberty, forced labor and the worst forms of child labor
- Serious violations of the rights of individuals in situations of war or conflict
- Severe environmentally damaging practices
- Gross corruption
The cash position should be satisfactory to cover 3-6 months of the Foundation’s ordinary expenses on management and administration.
Last update: Sep 17, 2023