Rotary investment fund
Introduction
With our Mission in mind – Rotarians wish to do Good for Society and Mankind - The Rotary Investment Fund has been established.
The Fund will let donations received be invested into high quality, low risk equities and let the return from this portfolio of securities form the basis for distribution of future donations from Rotary.
The initiative has been started in Rotary’s Chapter in Lyngby, residing close to the capital of Denmark, Copenhagen.
With this location, we are surrounded by high quality educational institutions within business and natural sciences and a community characterized by a wide range of world class professional, business and scientific competencies. Hereby supporting various industries and services including pharmaceutical industry, financial services/asset management, bio processing and chemistry.
We believe that this background forms a strong basis for the Rotary Investment Fund to become a truly value adding and sustainable fund that can form an important and valuable activity within the Rotary Organization.
Rotary Investment Fund – the Basics
RIF is established as an activity within Rotary, Lyngby, Denmark
As a Danish ‘Forening’ any capital gains recognized are tax free
…while any expenses are not tax-deductible
To the extent possible, the activities are based on voluntary work from the participants who will receive no financial compensation
Vision
Rotary Investment Fund (In the following: RIF) represents the financial foundation which enables Rotary to donate funds to projects and individuals in accordance with Rotary’s Mission of Doing Good.
The capital invested will have a size that enables support that can make a meaningful contribution to projects in Denmark and abroad.
mission
The donations received into RIF will be invested to establish a portfolio that will enable RIF to donate by distributing the financial return received from the portfolio of securities.
The portfolio will consist of international equities characterized by high standards on key parameters such as quality of earnings, governance, low market risk and solid expectations regarding the receipt of dividends. As to possible capital gains, it is the immediate intention that such gains are to be retained and help improve RIF’s solidity and viability.
Rotary’s Mission - Doing Good:
We wish to enable Rotarians to advance world understanding, goodwill, and peace through the improvement of health, the support of education, and the alleviation of poverty.
Investment activities
We intend is to establish an investment fund that can form the basis for significant donations to projects that Rotary wants to support. The goal is that the Fund’s size – and hence, the amounts donated - will be significant in size, and that RIF will represent a significant activity within Rotary.
Basic data
Amount: Initial capital - approx. DKK 50,000 (EUR 6,700)
Additional capital: Additional capital will be sought through donations from contributors
The target for invested capital at the end of 2024 is: DKK 1,000,000
We take note that with a direct return – dividend – of 3%, this will allow for donations of approx. DKK 30,000 in the following year
At present, the amount invested is very small, and the objective is therefore to bring the invested capital up to a level that reflects our ambitions.
In the longer term, one can imagine that capital gains can also be distributed - in whole or in part. However, at present it is considered that capital gains must remain in the fund and - possibly – be reinvested in connection with the ongoing allocation of the portfolio
Portfolio management
The management of the portfolio takes place in collaboration with external advisors e.g. CBS Investment Club, which oversees the preparation of proposals for investments, cf. the guidelines drawn up by the Board of RIF.
Investment Strategy
Investment Universe
Investments are made in individual shares. In the long term, investments can also be made in listed dividend-paying investment funds
Investments are made in individual shares, which
Are issued by well-established companies listed on a well-recognized stock exchange providing high liquidity and level of information,
Are expected to distribute stable – hopefully growing - dividends, and
Which are issued by companies operating in markets and with activities characterized by growth and stability
The investment focus is global.
Investments are to have a high degree of liquidity and be located in markets with minimal political risk. Thus, many European and American companies are considered to fit these criteria.
Once the size of the assets exceeds DKK 100,000, no single company share may exceed 20% of the total portfolio
The minimum size for single investments - at present - DKK 20,000 (to be adjusted as RIF grows)
Extract of key parameters for stock-picking
(Full list made in collaboration with external advisors)Assessment of competitive strength = > Earnings stability
Growth in underlying market
Direct return (dividend return)
ROIC – return on internal invested capital
Low debt
The category of shares - 'compounders' - is considered an interesting category to pursue (cf. appendix 1)
Earnings expectations
Absence of negative factors
Work and Decision Processes
The Portfolio is managed in collaboration with external advisors; initially, CBS Investment Club (CBSIC) will provide advice as cf. the following distribution of tasks
RIF board:
Formulates criteria for selecting investment candidates
Decides on the selection of investment candidates on the basis of recommendations from CIC
CBS Investment Club and other advisors:
Prepare written material about investment candidates on the basis of the established criteria for investments
Meeting frequency and communication
Formerly once a quarter and ad-hoc for fast decisions.