In recent years, the EuroQol Group was not only scientifically, but also financially successful. Significant surpluses have been achieved, most of which were invested in research, but parts have also been put aside as reserves. In times where significant interest was paid for deposits, it made sense to keep these reserves on relatively profitable savings accounts. Meanwhile interests are near zero which is reflected in the balance sheet figures of recent years, in which the interest income continued to decline in spite of higher reserves. In this light, it is necessary to reconsider the investment policy of the Foundation. This memo formulates an investment policy for the EuroQol Group and its members.
The new investment policy is intended to follow the following principles:
1. The safety of the assets has the highest priority.
This is the most fundamental requirement and follows the recent strategy of the EuroQol Group, which it will invest in new measurements methods for health related quality of life. The wish for opportunities to get research grants funded has been expressed by the members of the EuroQol Group, while the need for increasing our income by risky investments has not. The EuroQol Group and the EuroQol Research Foundation will therefore continue to generate revenue primarily through license rights, and the EuroQol Research Foundation is not intended to expand into a financial investment company. This means that generating interest income is not the focus of our deliberations, as the security of our assets comes first.
2. The choice of investments should protect the reserves for dramatic losses.
Investments are preferably carried out in Euro bonds, but comparable liquid currencies such as British Pounds and US Dollars are possible to strengthen overall diversification. Shares and derivatives are excluded. The investment portfolio might include state bonds and companies bonds of good investment quality (BBB and better) as well as the purchase of real estate for owner occupation by the EuroQol Office.
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. The treasurer will make proposals for investment decisions, in cooperation with the Executive Director and possibly with external experts on the basis of 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:
• Armaments and nuclear weapons
• Human Rights Abuse/Oppressive regimes
• Environmentally damaging practices
• Poor employment practices
• Animal testing on non-pharmaceutical products
5. The investment structure and the investment instruments should be transparent and not complicated, so that professional investment consulting (e.g. by an investment firm) can be waived or used just to a limited extent.
The outsourcing the investment decisions (e.g., to an investment company) could cause considerable costs, and investment decisions would possibly be less transparent and therefore harder to justify to the EQ membership.
6. The cash reserve should, at a minimum, equal the last annual turnover.
In order to cover any expected and unforeseen costs, it is wise to keep significant cash reserves.