The new funds--multi-strategy hedge, bank loans, and global aggregate fixed income strategies--were selected based on a report given by BBT's investment consultant to the Investment Committee in Nov. 2012, and the mutual fund investment vehicle for each strategy was selected from a list of top-rated options.
“Interest rates will inevitably increase in the next several years," said BBT president Nevin Dulabaum. "When they do, bond markets will likely be challenged to generate strong earnings. We hope that adding these three diversifying funds to our lineup of investment options will help investors offset the negative impact rising interest rates will have on bond returns."
These three new investment options will also be available for use in the asset allocation of Brethren Pension Plan's Retirement Benefits Fund, which is the pool of money that pays out annuity payments to Pension Plan retirees.
Department of Defense screening lists approved
As it does each year, BBT adopted two lists of companies that are prohibited from its actively managed funds--one containing publicly traded US companies that earn 10 percent or more of their income from Department of Defense contracts, and another containing the top 25 publicly traded Department of Defense contractors.
"These Department of Defense screening lists are part of our comprehensive attempt to invest in a way that reflects Church of the Brethren Annual Conference statements, when possible," said Steve Mason, director of BBT's socially responsible investing initiative. BBT also screens out companies that earn significant revenue from abortion, alcohol, firearms and other weapons, gambling, pornography, or tobacco.
This year, oil and gas companies Royal Dutch Shell, BP, and Valero Energy appear on the list. In addition to screening these companies out of its investments, BBT will not use any of their services--or the services of any other company that appears on these lists--in 2013. The complete lists are available at www.brethrenbenefittrust.org/screening.
Strategic Planning Committee establishes first steps
The Board approved the creation of a Strategic Planning Committee at its November meeting, and that group held its first gathering on the Thursday preceding the full April Board meeting. Together, the committee decided that its work in shaping the future course of BBT would be helped most by meeting with key stakeholders across the denomination. These times of inquiry will take place at Annual Conference in Charlotte, N.C., and at other opportunities in the coming months.
BBT's financial reports presented by auditor
An unqualified audit opinion of BBT's financial reports for 2012 for Brethren Benefit Trust Inc. and Brethren Foundation Inc. was reviewed by the Budget and Audit Review Committee. Craig Resch, a partner at auditing firm Legacy Professionals, presented an overview of the audited financial statements.
As this audit marked the end of a contract with Legacy, the committee also reviewed and recommended approval of a new three-year contract with that firm, which maintained its current fee for the next three years. The audited financials and recommendation about Legacy's renewal were approved by the committee and the board.
Bond manager and mutual funds retained for three-year terms
A representative of bond manager Agincourt Capital Management presented a review of its performance over the past three years to the Investment Committee. Agincourt has served BBT since 2006. After hearing the committee's recommendation to retain Agincourt, the board voted to retain the firm for another three-year term.
Tim Fallon of Marquette Associates presented a three-year analysis of the performance of the five mutual funds that BBT uses as vehicles for funds that do not currently have enough assets to be actively managed. The committee decided that these mutual funds' performances, compared with their benchmarks and peers, merited retention for another three years.
In other business
- Brethren Pension Plan members elected Beth Sollenberger to be a representative of Church of the Brethren ministers and district executives. Her name will be presented for ratification by delegates at Annual Conference.
- This was Donna Forbes Steiner’s last meeting as a board member. Her eight years of service on the board was commemorated at a banquet. In addition, the five-year tenures of staff members Steve Lipinski, manager of Foundation operations, and Patrice Nightingale, manager of production, were celebrated.
- A report regarding the funded ratio of Brethren Pension Plan's Retirement Benefits Fund as of Dec. 31, 2012, was presented. The funded ratio for the RBF has increased significantly over its 2008 low. A full report will be mailed to Pension Plan annuitants.
- The board received a report on the Supplemental Income Fund for Equitable Annuitants, a fund available to some employees of the entity formerly known as the Church of the Brethren General Board. The board approved funding for SIFEA grants for 2014.
- The Governance Committee reviewed staff-suggested changes to BBT's bylaws and articles of organization. One significant change is a provision that requires Standing Committee to include on the ballot "any incumbent director who was elected by Annual Conference and who is eligible for and willing to be considered for a second term of service." The board approved recommended updates to these documents and asked that further legal opinions on the documents be sought before they are recommended for approval by Annual Conference in 2014.
Source: 5/30/2013 Newsline