Here are four common mistakes that non-profit hospitals and health system trustees may be making with the organization’s investment portfolio.
1. Not tracking total investment portfolio performance. Using multiple investment managers may foster local relationships, but hospitals may not be demanding timely, comprehensive reports from all involved fiduciaries.
2. Infrequent investment manager review. Non-profit hospital boards must ensure that fiduciaries who manage investments are evaluated at least quarterly.
3. Undisciplined portfolio rebalancing. There should be a policy that mandates an annual rebalancing of the investment portfolio because it will lead to lower transaction costs and more diversified risk position.
4. Focusing on returns without considering volatility. Many non-profit organizations like hospitals and health systems may invest before defining the market, which may be an index like the Russell 3000 or simply the liabilities of the portfolio.
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