Brethren Benefit Trust (BBT) president Nevin Dulabaum reports to a meeting of the Church of the Brethren’s Mission and Ministry Board last fall. BBT hosts and manages the denomination’s Pension Plan and denominational investments through its Brethren Foundation, among a number of other services that also are offered for congregations, districts, and church-related agencies.
Investments were the focus of the April meeting of the Brethren Benefit Trust (BBT) Board of Directors in Elgin, Ill. Staff and board members came together at the Church of the Brethren General Offices from April 24-25 to discuss the selection of new investment funds, the move to daily valuations of funds under management, the confirmation of two investment management firms, and other matters related to BBT’s ministries.
“We have listened to requests from our members and are working with the board to strengthen the services and products we offer,” said BBT president Nevin Dulabaum. “We look forward to offering more investment choices, more frequently updated account values, and stronger fiscal management to those we serve.”
Staff recommended five funds to offer to members and clients that fit new investment styles that were added to the investment guidelines for the Brethren Pension Plan and Brethren Foundation by the board in Nov. 2009. The board approved the funds, which include an emerging markets stock fund through DFA, ING’s global public real estate fund, a Principal high-yield bond fund, a Vanguard Treasury inflation-protected securities fund, and a commodities-based fund managed by PIMCO. Brethren Foundation clients will be able to invest in these new funds in the coming months, as will members of the Pension Plan, once BBT is able to offer investment assistance.
“We searched various sectors to try to identify the best mix of funds to offer, and we think these will give our members and clients more choices for diversifying their assets,” said Jerry Rodeffer, BBT’s chief financial officer.
The board also approved the Investment Committee’s recommendation that the Pension Plan’s Common Stock fund be unbundled into its five components–International, Small Cap, Large Cap Core, Large Cap Growth, and Mid Cap Value–to provide greater variety of equity offerings for plan members. These funds will still comprise the Common Stock Fund, which will still be an allocation option.
The board approved an increase in how often BBT values its funds. While BBT currently values its funds twice monthly, the board approved a move to daily valuations. This decision will allow Pension Plan members access to updated account information through a recently launched Internet site, and will make up-to-date information available to Brethren Foundation clients once that ministry’s online presence is established.
Another decision could allow the Brethren Foundation to expand its client base. The board approved the request that the Brethren Foundation be allowed to serve non tax-exempt organizations that have values consistent with those of the Church of the Brethren, as long as those organizations do not make up more than 15 percent of the foundation’s annual revenue.
The board also confirmed two investment management firms. Based on current guidelines, the firm overseeing BBT’s large cap growth equity investments must exceed the performance of the Russell 1000 Growth index by one percent or more and bring in top quartile returns compared with similar investment managers over a five-year period. Because New Amsterdam, the manager of those funds, failed to achieve those goals in its tenure with BBT the Investment Committee recommended that the board dismiss this manager.
After interviewing two investment management firms to replace New Amsterdam, the committee recommended that Segall Bryant and Hamill, a Chicago-based investment adviser, be installed as the large cap growth equity manager for the Pension Plan and Brethren Foundation. The board approved both recommendations.
Additionally, the Investment Committee received a presentation by Agincourt–one of BBT’s two bond investment managers–reviewing its three-year performance. The board approved a recommendation that Agincourt be retained as a manager of those funds based on the firm’s outstanding investment performance. The firm’s portfolios for BBT and the Brethren Foundation beat the benchmark by seven percentage points in 2009.
Annual defense lists were presented to the board. Each year, BBT releases two lists of publicly traded companies that have strong business alliances with the Department of Defense. Because of BBT’s commitment to making investments that adhere to Brethren values and Annual Conference directives, actively managed investments in companies holding the 25 largest Department of Defense contracts, and companies that earn more than 10 percent of their income from such contracts, are prohibited. These lists can be found at www.brethrenbenefittrust.org by clicking on “Downloads” and then “Socially Responsible Investing.”
“Although our managers are expected to avoid investing in companies that are not in compliance with BBT’s socially responsible investing guidelines, we go a step further in honoring the Church of the Brethren’s historic peace stance by producing these lists,” said Steve Mason, coordinator of BBT’s socially responsible investing activities.
The board reviewed BBT’s 2010 shareholder initiatives, or efforts to effect change as an owner of stock in companies. This year, Mason will work with ConocoPhillips to ensure that its work does not interfere with the rights of indigenous people around the world. He also will pursue talks with Toyota regarding human rights and labor policies in its global supply chain.
In other business:
— auditing firm Legacy Professionals LLP offered a “clean opinion”–its highest designation–for BBT and Brethren Foundation 2009 financial reports;
— bylaws for BBT and the Brethren Foundation and their incorporated entities were updated and approved;
— staff and board addressed an ongoing issue with its custodian and administration of BBT’s securities lending portfolio;
— Michael Leiter, senior director of marketing and development at Fahrney-Keedy Home and Village in Boonsboro, Md., was elected to serve as a board member representing the Brethren retirement communities–a seat vacated by Carol Davis who resigned March 4; and
— board and staff reviewed the process for electing three board members in 2010. Two candidates–Wayne Scott and John Waggoner–will appear on the Annual Conference ballot; Karen Crim was elected to serve a second term by members of the Pension Plan; and in November, the board chose Eunice Culp to fill the third open seat. The elections of Crim and Culp will be brought to Annual Conference for affirmation.
— Brian Solem is publications coordinator for Brethren Benefit Trust.