Item - 2022.MM39.2

City Council on February 2 and 3, 2022, adopted the following:

1. City Council approve the following amendments to the Toronto Atmospheric Fund's current Statement of Investment Objectives and Principles, as adopted by the Board of Directors of the Toronto Atmospheric Fund at its meeting of July 9, 2021:

a. in Section 5.2, replace the term "Private Pooled Equity" in the desired asset mix with the term "Alternative Investments" and assign an allocation range of 0 percent to 15 percent with a portfolio target of 10 percent;

b. in Section 6.5, change the title from "Private Pooled Equity" to "Alternative Investments" and replace the current content with the following text: 

Alternative investments are financial assets that do not fall into conventional investment categories such as stocks, bonds, and cash. Alternative investment assets, due to their complex nature, tend to be held by more sophisticated investors such as institutional investors or other accredited investors.

Alternative investments are usually less liquid and may involve strategies such as the use of margin, leverage, derivatives, and other techniques, can be used to improve the risk-adjusted performance of the overall portfolio. Examples of these kinds of investments are private (pooled) equity or venture capital funds, hedge funds, managed futures, and commodities. Real estate is also often classified as an alternative investment.

Toronto Atmospheric Fund will continue to invest in third party managed private market investment funds which help in addressing climate change and air quality issues and avoid exposure to companies whose share value and/or viability may be at risk from climate change.

These Alternative investments are intended to provide diversification benefits for the overall portfolio along with solutions to manage certain risks (for example, interest rate risk, inflation risk).; and  

c. insert a new Section 7 entitled "Constraints and Prohibitions" that includes the following text:

7.1.  Toronto Atmospheric Fund  may invest in Financial Derivatives only under certain conditions, and for risk management purposes, namely:  

a. Derivatives may not be used to create a net leveraged position for the portfolios, introduce uncovered positions, or to create exposures to investments that would otherwise be prohibited by this Policy.   

b. The portfolios may directly or indirectly (for example through pooled funds) utilize derivatives only to:

 i. create an Asset Mix position within the ranges and among the asset classes set out in this Policy;

ii. adjust the duration of the fixed income portfolio;

iii. replicate the investment performance of a recognized capital market index;

iv. increate the portfolio current revenue by selling covered calls;

v. manage the currency exposure of a portfolio, or

vi. reduce risk as part of a hedging strategy.

c. When investing in pooled funds, the pooled fund offering documents/investment policy will apply and the Investment Manager for any pooled fund must provide notification to Toronto Atmospheric Fund regarding any revisions to the fund's policies.

7.2  Prohibited Investments

a.  Toronto Atmospheric Fund may not invest in companies for the purpose of managing them unless approved by Council.

b.  Toronto Atmospheric Fund will not actively purchase securities on margin or making short sales.

c.  Toronto Atmospheric Fund will not invest in funds and make investments that are inconsistent with Toronto Atmospheric Fund's mandate.