By Jerry Love, Louisiana Baptist Foundation
ALEXANDRIA (LBF) – Trustees of the Louisiana Baptist Foundation received positive investment reports and upbeat updates about operations during a regular quarterly business meeting held April 30 in the Louisiana Baptist Building.
The good news included that every portfolio component had earned a positive return for the first quarter, with almost all sectors exceeding their benchmarks.
Lee Morris of Graystone Consulting summed up the performance by simply stating, “fourth quarter of ’18 – bad; first quarter of ’19 – good!”
He added that first quarter returns had erased the previous quarter’s losses.
Fixed income portfolios continued to perform in line with expectations, he said, adding that bond returns are relatively good for the moment but are expected to be flat going forward – based on the prevailing assumption among investment analysts that the Federal Reserve Board will continue to hold rates steady the remainder of the year.
The alternative investment allocation of the LBF portfolio (preferred stocks, convertible securities, MLP’s, covered calls and infrastructure) continued to add value with positive returns in all areas, Morris said. Only one segment, infrastructure, failed to exceed its benchmark, having only a negligible effect on the overall portfolio.
U.S. equity markets led the performance he said, pointing to strong results from the S&P 500.
He observed international equities also had performed well and that these would offer a good investment opportunity in the near future. He also commented that rebalancing to include more international equities could prove to be profitable for a longer term strategy – a view he said was held by Morgan Stanley’s Global Investment Committee.
The GIC also believes there will be more volatility and lower returns over the next 7 years with only modest returns for increased investment risk, he said. However, in the longer 20-year forecast, the GIC projects that the reward for investing in equities should outweigh associated risks of the marketplace.
For Q1 2019 the LBF portfolio produced the following returns:
— Short Term Fund, 0.44 percent actual yield (nearly 1.8 percent annualized);
— Group Investment Fund (comprised of various market sectors), 8.95 percent total return; and,
— Diversified Income Fund (conservative income-oriented fund), 2.76 percent total return.
Morris also confirmed all managers employed for the Foundation through Graystone Consulting continue to adhere to the Investment Policies established by the LBF Board. The net assets under management stand at $160,933,391 as of the end of March, he said.
In other reporting, Chuck Murry, LBF controller, reported a net surplus in the operating budget for the first quarter of the year.
Income from the Cooperative Program was slightly ahead of projections, but cost recovery fees were less than expected due to the downturn of the final quarter of 2018. The uptick in the market and increase in assets under management, along with a watchful eye on expenditures, helped keep the budget on an even keel, he said.
Jerry Love, planned giving director, reported several estates were settled in the opening months of the year and that several families had set up estate plans to leave bequests to their local churches. The Foundation also assisted with a $17,000 gift of stock donations that benefitted the Louisiana Baptist Children’s Home and Family Ministries as well as a local church.
Love said the LBF staff is working to complete three additional estate bequests that will provide nearly $1.2 million, combined, to a number of Baptist ministries and a local congregation.
Executive Director Wayne Taylor reported there has been progress on the accounting system upgrade.
U.S. Computers of Lafayette is updating the existing accounting system, and Taylor stated that successful testing suggests the staff will be able to employ the improved software as early as June. The updates provide long-term data security and offer a platform for future expanded services to clients.
The Board approved a motion to change the parameters for income placed in reserve for the Short Term Fund. Trustees approved the creation of the reserve in the aftermath of the U.S. financial crisis of 2008, and had been setting aside some of the earnings as protection against a similar future market crisis.
Taylor said “the STF reserve is at a healthy level” and that by changing the amount being set aside, more interest could be paid to churches and entities invested in the Short Term Fund.