RESTRICTED  
  
WT/BFA/W/505  
31 October 2019  
(19-7314) Page: 1/3 
Committee on Budget, Finance and Administration    
 
POLICY FOR THE MANAG EMENT OF  
THE WORKING CAPITAL FUND  
1  PURPOSE  
1.1.  The purpose of the Policy for the Management of the Working Capital Fund (WCF)  is to 
describe the procedures that will be followed for the governance , administrative management 
and investment management  of the Working Capital Fund.  
1.2.  The purpose of the WCF , as described in  Regulation 26 of the Financial Regulations1 of the 
WTO is to finance budgetary appropriations pending receipt of contributions  and, in exceptional 
circumstances and subject to prior authorization of the General Council, to finance commitments 
relating to extraordinary expenditure.  
2  LEGAL BASIS  
2.1.  Regulation 18(c) of the Financial Regulations foresees investment of Working Capital Fund 
assets : (c) income der ived from investments of the Working Capital Fund shall be classed as 
miscellaneous income . 
2.2.  Regulation 31 on Treasury Management further provides that  
"[…] The investments of monies standing to the credit of any trust funds, reserve or special 
account sha ll be subject to any directives of the appropriate authority.  
The Director -General shall include in the financial statements submitted to the General 
Council a statement of the investments currently held.  
Income from investments shall be credited as provid ed in the rules or agreement relating 
to each fund or account. " 
3  GOVERNANCE  
3.1.  The General Council is the ultimate  authority over the Working Capital Fund , guided by 
recommendations from the Committee on Bud get, Finance and Administration  (CBFA) . 
3.2.  The Committee on Bud get, Finance and Administration  is responsible for  (a) the 
development of policies for the management of the Working Capital Fund and their subm ission  to 
the General Council for approval ; (b) monitoring  the Working Capital Fund  in the conte xt of the 
WTO's overall financial situation  and recommend ing authoriz ation of  expenditure s or amending 
the policy as necessary ; and (c) defining the investment strategy for the WCF .  
4  ADMINISTRATIVE MANAGEMENT  
4.1.  The WTO Secretariat shall oversee the administr ative management of the assets of the 
Working Capital Fund. The Secretariat may make use of external experts where needed. These 
include  investment advisors, investment management firms, custodial banks.  The Secretariat is 
encouraged to benefit from existing contractual relationships  where possible . 
                                                
1 References to the Financial Regulations in this document refer to WT/L /156/Rev.3 .  WT/BFA/W/ 505 
 
- 2 - 
 
  4.2.  There are administrative and investment  costs associated with the management of the WCF . 
The WTO Secretariat will consider costs as a relevant factor in administrative decision making 
and monitor costs to maintain  them as low as possible without hindering the Working Capital 
Fund's capacity to achieve its objectives.  
4.3.  The WTO Secretariat will report regularly on the financial situation of the Working Capital 
Fund to the Committee on Budget, Fin ance and Administration  including with reference to relevant 
performance benchmarks . The interval between CBFA  reporting  dates shall not be more than 
6 months.  
4.4.  The Office of Internal Oversight and the External Auditors  may include treasury and Working 
Capital Fund management arrangements in their risk -based audits  as an additional oversight 
mechanism to their routine financial audits .  
5  INVESTMENT MANAGEMEN T PRINCIPL ES 
5.1.  The objective for the investment management of the Working Capital Fund is to maintain, 
at least, the long -term market value and purchasing power of the assets, while maintaining 
sufficient liquidity to meet anticipated short -term obligations. Funds not re quired for the purposes 
of short -term liquidity will be considered potentially investable.  
5.2.  When investing, the Working Capital Fund will take a long -term perspective, taking market 
risk into account, with a view to realizing an appropriate return on inves tments while protecting 
and preserving the underlying capital.  The portion of the WCF derived from the originally assessed 
Member contributions to the Fund2 shall be invested in a manner that is short term and easily 
retrievable.  
5.3.  The Working Capital Fund w ill adopt an investment approach that ensures an appropriate 
diversification of assets that seeks to mitigate market -based risks and provide for a predictable 
and stable return.  
5.4.  In order to provide a framework to facilitate the achievement of the WCF 's obj ective, 
Environmental, Social, and Governance (ESG) criteria and the internationally recognized 
United  Nations Principles for Responsible Investment (UNPRI) shall be incorporated into the WCF 's 
investment strategy.  
5.5.  Annex 1 of this document elaborates spec ific investment governance and  Investment  
strategy . 
6  EFFECTIVE DATE  
6.1.  This policy takes effect after its approval by the General Council based on a recommendation 
from the CBFA .  
7  REVIEW  
7.1.  The Policy for the Management of the  Working Capital Fund will be reviewed at least every 
5 years.  
 
_______________  
 
 
  
                                                
2 As of 31 December 2018, this amounted to CHF 4.7 million . WT/BFA/W/ 505 
 
- 3 - 
 
  ANNEX  1: INVESTMENT G OVERNANCE  AND INVESTMENT STRATEGY  
 
INVESTMENT GOVERNANC E 
 
The CBFA defines the investment strategy for the WCF and is responsible for monitoring the 
Secretariat and any external advisors to ensure compliance with the strategy. It may not delegate 
either of these responsibilities.  
 
The Secretariat has primary responsibil ity for implementation of the investment strategy and 
operational management of the WCF. The Secretariat may delegate part or all these functions  to 
external advisor s.  
 
Responsibilities for various tasks pertaining to the management of the WCF's assets ar e described 
in the following table : 
 
 
Responsibility  
  
Tasks   
Responsible Entity  
• Strategic  ➔ Management  policy  
➔ Investment strategy  
➔ High level monitoring  
(including of outcomes 
relative to its agreed 
objectives)   - CBFA supported by the 
secretariat and external 
advisor  
• Implementation  ➔ Portfolio structuring  
➔ Manager selection  
➔ Technical monitoring  - Secretariat and external 
advisor  
• Execution  ➔ Security selection  
➔ Portfolio administration  - External asset managers 
and custodian banks  
 
INVESTMENT STRATEGY  
 
Investment risk  
 
The WCF will adopt a low risk investment strategy that reflects the priority placed on protecting 
and preserving investment capital, minimizing vulnerability to exchange rate fluctuations and the 
importance of diversification of investment instruments .  
 
Allocation of assets  
 
The WCF will develop and implement an appropriate asset allocation as part of its risk -
management appro ach.  The WCF will establish and maintain an appropriate level of portfolio 
diversification, accounting for the relative liquidity of specific assets and their distribution across 
asset types and economic sectors.    
 
The asset allocation of the WCF will b e appropriately monitored and will be rebalanced as 
necessary to account for any external or internal developments that may alter the risk profile of 
the Fund, consistent with the overall investment strategy identified above.  
 
 
__________