Collective Investment Funds

Policies and Procedures

National banks are required by 12 CFR 9.5 to adopt and follow written policies and procedures that are adequate to maintain their fiduciary activities in compliance with applicable law. In addition, when administering a CIF, a bank must operate the fund in compliance with 12 CFR 9.18(b). The scope and detail of policies and procedures governing a CIF are generally set forth in the fund’s plan, which describes how the bank will operate the fund. Appendix B includes a detailed list of the minimum provisions that must be included in a CIF plan.

From a bank’s standpoint, the more CIFs the bank offers and the more sophisticated the CIFs’ investment strategies, the greater the need for formalized and detailed policies and procedures. The administration of CIFs is a complex activity, as it requires a bank to pool participant assets while ensuring that each participant’s interests are served. Appendix E, “Investment Policy Statements,” in the “Investment Management Services” booklet of the Comptroller’s Handbook addresses the factors a bank should consider when drafting or evaluating a CIF’s investment objectives and strategies.

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