Investment Committee Construction Best Practices

March 23, 2023

Executive Summary

- Building a well-functioning Investment Committee (IC) is a critical step in the stewardship of perpetual assets. It determines how effectively the investment program is governed, which translates. directly into dollars and cents. But who should serve on that committee, what experiences and principles should they bring, and how the group should work together are critical questions that should be asked.
- Completing an IC composition matrix can help identify characteristics and areas of expertise that are important for IC members to possess, as well as highlight any current gaps.
- Based on our experience, the best IC members are often those that, irrespective of their professions, possess “soft skills” like open-mindedness and strong listening skills.

- Determining the ideal size of an IC requires weighing factors that can increase or decrease the potential effectiveness of the committee.
- In GEM’s experience, a 4-5 person IC is often ideal, as it forces a level of engagement that can be lost in larger groups. Some experts broaden that range and indicate that a 1-9 person IC can be best depending on the size of the organization.

- In GEM’s experience, establishing and enforcing strong IC governance norms is the key differentiating factor for committee effectiveness.
- GEM has put in place a number of practices to help ICs establish and maintain foundational norms like IC member preparation (reviewing all materials and submitting questions in advance), focus on long-term investment horizon, and ongoing IC member education.

Read More

Recent Insights

Ten Mistakes in Investment Policy Development

An effective Investment Policy Statement should support good governance and the unique needs of your institution. Our whitepaper explores common pitfalls in investment policy development and offers guidance on how to get it right.

GEM Private Pacing Methodology

Sourcing and manager selection typically get top billing in conversations around private investments, but one underappreciated aspect of a successful private allocation—explored in our recent whitepaper—is the art of pacing commitments to ensure appropriate portfolio allocation.

GEM 2024 Outlook: The Big Debates

In our 2024 Outlook, we outline four current issues that are impacting portfolios and offer our views on how these questions might influence our allocation strategy and the broader economic landscape.

Connect with us

Let’s start a conversation about how we can help.