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Mineral Investment Policy

  1. Purpose
  2. Mineral Rights Assets
  3. Investment Authority
  4. Fiduciary Standards
  5. Spending Guidelines
  6. Statement of Investment Objectives
  7. Investment Guidelines
  8. Selection of Investment Managers
  9. Guidelines for Portfolio Holdings
  10. Control Procedures
  11. Adoption of Investment Policy Statement

Tarrant County College District (“TCCD”) established a 501 (c)(3) Foundation, known as the Tarrant County College Foundation (the “Foundation”) for the purpose of providing philanthropic support for students and critical needs of TCCD. The Foundation consists of contributions from TCCD and donors. 

In addition, TCCD receives payments from a lease or contract for the management and development of land owned by the TCCD and leased for oil, gas, or other mineral development. In keeping with the fiduciary responsibility of the Board of Trustees of the District (the "TCCD Board"), TCCD entered into a Mineral Management Agreement (“MMA”) (Board Approval 12-12-2019) with the Foundation to oversee the management of certain designated funds of the College including those derived from mineral leases. ln accordance with the provisions and conditions of the MMA, the Foundation shall invest the funds in compliance with State law and in accordance with the TCCD Board’s investment policy. Annually, the Foundation shall remit monies needed by TCCD to fund certain scholarships. 

Assets governed by the MMA will be further referred to as the “Funds” which shall have the same meaning as “Corpus” as defined in the Mineral Management Agreement. 


The purpose of this Policy Statement (herein so called) is to achieve the following: 

  1. Document investment objectives, annual spending goals, performance expectations and investment guidelines for Fund assets.
  2. Establish an appropriate investment strategy for managing all assets, including an investment time horizon, risk tolerance ranges and asset allocation to provide sufficient diversification and overall return over the long-term time horizon of the Funds.
  3. Establish investment guidelines to control overall risk and liquidity.
  4. Establish periodic performance reporting requirements to monitor investment results and confirm that the investment policy is being followed.
  5. Comply with fiduciary, prudence, due diligence and legal requirements for Funds assets. 

Mineral Rights Assets

Monies governed by the MMA remain the property and responsibility of TCCD and fiduciary responsibility of the TCCD Board. Due to the long-term nature of the investment of the Funds and with the increased investment authority under the Texas Government Code 2256.0202, these Funds are authorized to be invested by a trustee under Subtitle B, Title 9, Property Code (Texas Trust Code). The legal authority is further restricted as to authorization and allocations by action of the TCC D Board through adoption of this Policy and investment of these funds will be governed in strict accordance with this Policy Statement.

The Funds will be managed as a separate and distinct portfolio under purview of the Foundation Board consistent with the MMA. The Foundation Board shall retain the services of an investment advisor registered with the Securities & Exchange Commission (“SEC”) approved by the TCCD Board for management of the portfolio (to be referred to as the "Advisor"). The Advisor will manage the funds as a Trustee as defined under provisions of Subtitle B, Title 9, Property Code (Texas Trust Code) and in accordance with this Policy Statement. 

The portfolio must be structured as and reported as a separately invested portfolio of TCCD. In addition, the Funds shall not include funds received as gifts or alternate revenue from any other source in accordance with Texas Government Code 2256.0202. 

Investment Authority

The Foundation has appointed a Foundation Board to oversee certain policies and procedures related to the operation and administration of the Foundation. The Foundation Board will have authority to implement the investment policy and guidelines in the interest of the Funds to best satisfy the purposes of the Funds. In implementing this Policy Statement, the Foundation Board may delegate certain functions to: 

  1. An SEC-registered Advisor to assist the Foundation Board in the investment process and to maintain compliance with this Policy Statement. The Advisor may assist the Foundation Board in establishing investment policy objectives and guidelines. The Advisor will adjust asset allocation for the Funds subject to the guidelines and limitations set forth in this Policy Statement and the MMA. The Advisor will also select investment managers (“Managers”) and strategies consistent with its role as a fiduciary for the Funds. The investment vehicles allowed may include mutual funds, commingled trusts, separate accounts and other investment vehicles deemed to be appropriate by the Advisor. The Advisor is also responsible for monitoring and reviewing investment managers; measuring and evaluating performance; and other tasks as deemed appropriate in its role as Advisor. The Advisor may also select investments with discretion to purchase, sell, or hold specific securities, such as Exchange Traded Funds, that will be used to meet the Funds’ investment objectives. The Advisor shall never take possession of securities, cash or other assets of the Funds, all of which shall be held by the custodian.
  2. A custody bank separate and unrelated to the Advisor (the “custodian”) selected by the Foundation Board to maintain possession of physical securities and records of street name securities owned by the Funds, collect dividend and interest payments, redeem maturing securities, and effect receipt and delivery following purchases and sales. The custodian may also perform regular accounting of all assets owned, purchased, or sold, as well as movement of assets into and out of the Funds.
  3. Specialists such as attorneys, auditors, and outside consultants to assist the Foundation Board in meeting its responsibilities and obligations to administer Funds assets prudently. 

Fiduciary Standards 

The Foundation Board, staff, and all parties involved in the management of the Funds’ assets shall exercise their duties in accordance with the Uniform Prudent Management of Institutional Funds Act (“UPMIFA”). Key responsibilities include the following: 

  1. Give primary consideration to donor intent as expressed in a gift instrument,
  2. Act in good faith, with the care an ordinarily prudent person would exercise,
  3. Incur only reasonable costs in investing and managing funds,
  4. Make a reasonable effort to verify relevant facts,
  5. Make decisions about each asset in the context of the portfolio of investments, as part of an overall investment strategy,
  6. Diversify investments unless due to special circumstances, the purposes of the Funds are better served without diversification,
  7. Dispose of unsuitable assets, and
  8. In general, develop an investment strategy appropriate for the Funds and TCCD. 

Spending Guidelines

The Funds’ spending policy is designed to meet a number of key objectives including the following: 

  1. Provide a stable income stream to help TCCD meet its annual spending needs.
  2. Maintain the long-term intergenerational purchasing power of endowed assets to support future spending needs.
  3. Support the operational needs of TCCD (if and when needed). 

The Funds’ annual spending target is 3% of a rolling five-year average of the quarterly market values of the assets. The TCCD Board has the authority to modify the spending target in a given year as spending needs and general economic conditions change but will target a range of 3% to 5% each year. 

Statement of Investment Objectives 

The main investment objectives of the Funds are to maintain the purchasing power of the assets into perpetuity and achieve investment returns necessary to sustain the level of spending needed to support the Funds’ goals. This will be accomplished by achieving long-term growth of Funds’ assets by maximizing long-term rate of return on investments and minimizing risk of loss to fulfill the Foundation’s current and long-term spending policies. 

The TCCD Board believes a combination of active and passive management will allow the Funds’ assets to better realize their long-term return objectives. In addition to adopting low-cost passive management as a core position, management fees of all advisors and sub-advisors are to be reviewed regularly to ensure managers are selected that can best outperform net of fees over long periods of time. 

The investment objectives of the Funds are as follows: 

  1. To invest assets of the Funds in a manner consistent with the following fiduciary standards:
    1. all transactions undertaken must be for the sole interest of Funds beneficiaries, and
    2. assets are to be diversified in order to minimize the impact of large losses from individual investments.
  2. To provide for funding and anticipated withdrawals on a continuing basis for spending policy needs and reasonable expenses of operation of the Funds.
  3. To enhance the value of Funds assets in real terms over the long-term through asset appreciation and income generation, while maintaining a reasonable investment risk profile.
  4. Subject to performance expectations over the long-term, to minimize principal fluctuations over the Time Horizon (as defined below).
  5. To achieve a long-term level of return commensurate with contemporary economic conditions and equal to or exceeding the investment objective set forth in this Policy Statement under the section labeled “Performance Expectations”. 

Investment Guidelines

Within this section of the Policy Statement, several terms will be used to articulate various investment concepts. The descriptions are meant to be general and may share investments otherwise considered to be in the same asset class. They are: 

"Growth Assets" - a collection of investments and/or asset classes whose primary risk and return characteristics are focused on capital appreciation. Investments within the Growth Assets category can include income and risk mitigating characteristics, so long as the predominant investment risk and return characteristic is capital appreciation. Examples of such investments or asset classes are: domestic and international equities or equity funds, private or leveraged equity, certain real estate investments, and hedge funds focused on equity risk mitigation or equity-like returns. 

"Income Assets" - a collection of investments and/or asset classes whose primary risk and return characteristics are focused on income generation. Investments within the Income Assets category can include capital appreciation and risk mitigating characteristics, so long as the primary investment risk and return characteristic is income generation. Examples of such investments or asset classes are: fixed income securities, guaranteed investment contracts, certain real estate investments, and hedge funds focused on interest rate risk mitigation or income investment-like returns. 

"Real Return Assets" - a collection of investments and/or asset classes whose primary risk and return characteristics are focused on real returns after inflation. Investments within the Real Return category can include inflation protected securities, commodities, certain real estate investments and hedge funds. 

Time Horizon 

The investment objectives for the Funds are based on a long-term investment horizon of five years or longer. Interim fluctuations should be viewed with appropriate perspective. The TCCD Board has adopted a long-term investment horizon such that the risks and duration of investment losses are carefully weighed against the long-term potential for appreciation of assets.

Liquidity and Diversification 

In general, the Funds may hold some cash, cash equivalent, and/or money market funds for near-term spending needs and expenses. Remaining assets will be invested in longer-term investments and shall be diversified with the intent to minimize the risk of long-term investment losses. Consequently, the total portfolio will be constructed and maintained to provide diversification with regard to the concentration of holdings in individual issues, issuers, countries, governments or industries. 

Asset Allocation 

The TCCD Board believes that to achieve the greatest likelihood of meeting the investment objectives and the best balance between risk and return for optimal diversification, assets will be invested in accordance with the targets for each asset class as follows to achieve an average total annual rate of return that is equal to or greater than the target rate of return over the long-term, as described in Performance Expectations.

Asset Classes Sub-Asset Classes Range (%) Target (%)
Growth Domestic Equity 6–46 26
International Equity — Developed & Emerging 0–34 14
Real Estate (Publicly Traded REITS) 0–10
Income Domestic Government & High-Quality Corporate 40–80 60
Domestic Below Investment Grade Fixed Income 0–15 0
International Fixed Income — Developed & Emerging 0–15 0
Alternatives Commodities 0–5 0
Hedge Funds 0–5 0
Private Funds 0–5 0
Cash Equivalents   0–20 0

The Advisor and each Manager will be evaluated against their peers on the performance of the total funds under their direct management. For deviations within non-publicly traded asset allocations, the Advisor shall notify the Foundation Board who shall notify the TCCD Board prior to implementation. 

Rebalancing Philosophy 

The asset allocation range established by this Policy Statement represents a long-term perspective. As such, rapid unanticipated market shifts or changes in economic conditions may cause the asset mix to fall outside Policy Statement ranges. When allocations breach the specified ranges, the Advisor will rebalance the assets within the specified ranges. The Advisor may also rebalance based on market conditions. 

Risk Tolerance 

Subject to investment objectives and performance expectations, the Funds will be managed in a style that seeks to minimize principal fluctuations while targeting the hurdle rate over the established Time Horizon. 

Performance Expectations 

Over the long-term, five years or longer, the performance objective for the Funds will be to achieve an average total annual rate of return that is equal to or greater than the hurdle rate, a combination of expected spending and inflation. Additionally, it is expected that the annual rate of return on assets will be commensurate with the then prevailing investment environment. Measurement of this return expectation will be judged by reviewing returns in the context of industry standard benchmarks, peer universe comparisons for individual investments and blended benchmark comparisons for the Funds in its entirety. 

Selection of Investment Managers 

The Advisor shall prudently select appropriate Managers to invest the assets of the Funds. Managers must meet the following criteria: 

  • The Manager must provide historical quarterly performance data compliant with Global Investment Performance Standards (GIPS®), SEC, Financial Industry Regulatory Agency (“FINRA”) or industry recognized standards, as appropriate.
  • The Manager must provide detailed information on the history of the firm, key personnel, support personnel, key clients, and fee schedule (including most-favored-nation clauses). This information can be a copy of a recent Request for Proposal (“RFP”) completed by the Manager or regulatory disclosure.
  • The Manager must clearly articulate the investment strategy that will be followed and document that the strategy has been successfully adhered to over time.
  • The investment professionals making the investment decisions must have a minimum of three (3) years of experience managing similar strategies either at their current firm or at previous firms. 

Guidelines for Portfolio Holdings 

Direct Investments by Advisor 

Every effort shall be made, to the extent practical, prudent and appropriate, to select investments that have investment objectives and policies that are consistent with this Policy Statement (as outlined in the following sub-sections of the “Guidelines for Portfolio Holdings”). However, given the nature of the investments, it is recognized that there may be occasional minor deviations between this Policy Statement and investment holdings. 

Limitations on Managers’ Portfolios 


No more than the greater of 5% or weighting in the relevant index (Russell 3000 Index for U.S. issues and MSCI ACWI ex-U.S. for non-U.S. issues) of the total equity portfolio valued at market may be invested in the common equity of any one corporation; ownership of the shares of one company shall not exceed 5% of those outstanding; and not more than 40% of equity valued at market may be held in any one sector, as defined by the Global Industry Classification Standard (GICS). 

Domestic Equities. Other than the above constraints, there are no quantitative guidelines as to issues, industry or individual security diversification. However, prudent diversification standards should be developed and maintained by the Manager. 

International Equities. The overall non-U.S. equity allocation should include a diverse global mix that is comprised of the equity of companies from multiple countries, regions and sectors. 


Fixed income securities of any one issuer shall not exceed 5% of the total bond portfolio at time of purchase. The 5% limitation does not apply to issues of the U.S. Treasury or other Federal Agencies. The overall rating of the fixed income assets as calculated by the Advisor shall be investment grade, based on the rating of one Nationally Recognized Statistical Rating Organization (“NRSRO”). 


Alternatives may consist of non-traditional asset classes such as hedge funds, private equity, real estate and commodities, when deemed appropriate. The total allocation to this category may not exceed 15% of the overall portfolio. 

Hedge Funds: Primary objective shall be to enhance the risk-return profile of the overall portfolio. This can be accomplished by using a combination of hedge fund strategies that may enhance returns at a reasonable level of risk or reduce volatility while providing a reasonable level of return. These asset classes may differ from traditional public market asset classes due to the use of certain strategies including short-selling, leverage, and derivatives. Hedge funds may also invest across asset classes. The use of direct hedge funds and fund-of-hedge funds are allowed. For purposes of asset allocation targets and limitations, single strategy hedge funds will be categorized under the specific asset class of the fund. For example, a long/short U.S. equity fund will be categorized as “Other” in the Growth Assets category while a long/short credit fund will be categorized as “Other” in the Income Assets category. Multi-strategy hedge funds that cannot be easily categorized under one asset class will be included in “Other” under either the Growth Assets or Income Assets category depending on the risk- return profile of the strategy. 

Private Equity: Private equity is less liquid than publicly traded equity securities and can provide returns that are greater than what is available in publicly traded markets. The private equity portfolio may include investments in a variety of commingled/partnership and direct investment vehicles including, but not limited to, venture capital, buyout, turnaround, mezzanine, distressed security, and special situation funds. The private equity portfolio is recognized to be long-term in nature and highly illiquid. Due to their higher risk, private equity investments are expected to provide higher returns than publicly traded equity securities. For purposes of asset allocation targets and limitations, these funds will be categorized as “Other” under the Growth Assets category. 

Private Debt: Private debt is less liquid than publicly trade debt and can provide returns that are greater than what is available in publicly traded markets. The private debt portfolio may include investments in a variety of commingled/partnership and direct investment vehicles including, but not limited to, direct lending, distressed debt, multi-asset credit, structured credit, mezzanine debt, real estate debt, and special situations. Due to their higher risk, private debt investments are expected to provide higher long-term returns than publicly traded debt securities. For purposes of asset allocation targets and limitations, these funds will be categorized as “Alternative Assets”. 

Real Estate: Consists of publicly traded Real Estate Investment Trust (“REIT”) securities that shall be diversified across a broad array of property types and geographic locations. Investments of this type are designed to provide a stable level of income combined with potential for price appreciation, particularly in periods of unexpected inflation. For purposes of asset allocation targets and limitations, publicly traded REITs will be categorized as “Other” under the Growth Assets category. 

Inflation Hedge: Shall consist of pooled vehicles holding among other assets: Treasury Inflation Protected Securities (“TIPS”), commodities or commodity contracts, index-linked derivative contracts, certain real estate or real property funds and the equity of companies in businesses thought to hedge inflation. Inflation hedge assets will be reported in the Real Return Assets category. 


Cash equivalents shall be held in funds complying with Rule 2(a)-7 of the Investment Company Act of 1940. 

Portfolio Risk Hedging 

Portfolio investments designed to hedge various risks including volatility risk, interest rate risk, etc. are allowed to the extent that the investments are not used for the sole purpose of leveraging assets. One example of a hedge vehicle is an exchange traded fund (“ETF”) which takes short positions. 

Prohibited Investments 

Except for purchase within authorized investments, securities having the following characteristics are not authorized and shall not be purchased: letter stock and other unregistered securities, direct commodities or commodity contracts, or private placements (with the exception of Rule 144A securities). Further, derivatives, options, or futures are prohibited. Direct ownership of real estate, natural resource properties such as oil, gas or timber and the purchase of collectibles is also prohibited. 


All assets of the Funds shall be held by a custodian, unrelated to the Advisor and approved by the Foundation Board for safekeeping of assets. The custodian shall produce statements on a monthly basis, listing the name and value of all assets held, and the dates and nature of all transactions in accordance with the terms in the Custodial Agreement. Investments of the Funds not held as liquidity or investment reserves shall, at all times, be invested in interest-bearing accounts. Investments and portfolio securities may not be loaned. 

Control Procedures 

Review of Investment Objectives 

The Advisor shall review annually and report to the Foundation Board the appropriateness of this Policy Statement for achieving the Funds’ stated objectives. It is not expected that this Policy Statement will change frequently. In particular, short-term changes in the financial markets should not require an adjustment in this Policy Statement. 

Review of Investment Performance 

The Advisor shall report on a quarterly basis to the Foundation Board to review the investment performance of the Funds. In addition, the Advisor will be responsible for keeping the Foundation Board advised of any material change in investment strategy, Managers, and other pertinent information potentially affecting performance. 

The Advisor shall compare the investment results on a quarterly basis to appropriate peer universe benchmarks, as well as market indices in both equity and fixed income markets. Examples of benchmarks and indexes that will be used include the Russell 3000 Index for broad U.S. equity strategies; S&P 500 Index for large cap U.S. equities, Russell 2000 Index for small cap U.S. equities, MSCI ACWI ex-U.S. Index for broad based non-U.S. equity strategies; MSCI Europe, Australasia, and Far East (EAFE) Index for developed markets international equities, Barclays Capital Aggregate Bond Index for fixed income securities, and the U.S. 91 Day T-bill for cash equivalents. The Russell 3000 Index will be used to benchmark the U.S. equities portfolio; the MSCI ACWI ex-U.S. Index will be used to benchmark the non-U.S. equities portfolio; the Barclays U.S. Aggregate Bond Index will be used to benchmark the fixed income portfolio. The categories “Other” will be benchmarked against appropriate indices depending on the specific characteristics of the strategies and funds used. 

Voting of Proxies 

The TCCD Board recognizes that proxies are a significant and valuable tool in corporate governance. The voting rights of individual stocks held in separate accounts or collective, common, or pooled funds will be exercised by the investment managers in accordance with their own proxy voting policies. The voting rights may be exercised by the Advisor in accordance with the Foundation Board’s authorization. 

Adoption of Investment Policy Statement 

Any changes and exceptions to this Policy Statement will be made in writing and adopted by the TCCD Board. Once adopted, changes and exceptions will be delivered to each Manager, as appropriate, by the Advisor. 

Approved by the Tarrant County College District Board:

Conrad Heede, President 

September 17, 2020

Dr. Diane Patrick, Secretary 

September 17, 2020 Date

Updated September 25, 2020