By Jerry Love, LBF Communications
ALEXANDRIA – Despite market volatility in recent months, positive return numbers greeted the Trustees of the Louisiana Baptist Foundation at its regular quarterly meeting July 31 at the Louisiana Baptist Building in Alexandria.
Travis Morehart of Shreveport chaired the morning Investment Committee, Wayne Hunt of Houma headed the Operating Committee, and Board President Cornelius Tilton of New Orleans presided over the afternoon meeting of the full Board of Trustees.
The morning started with the Investment Committee hearing a report on the LBF investment returns from Lee Morris of Graystone Consulting. The current investment environment continues to be one of low rates and low return, Morris said.
Despite swings in the stock markets the LBF portfolio is doing well thus far this year. The Group Investment Fund, which is the strategy used to invest the majority of the endowment funds held by the Foundation, has gained 5.41 percent since the beginning of the year, exceeding its benchmark by 80 basis points or .8 percent. The LBF Fixed Income Fund outpaced its benchmark by 2.92 percent, with a total return year to date of 4.05 percent. The Equity Fund returned a total of 6.15 percent through the end of June.
Much of the Investment Committee meeting was dominated by conversation regarding a change in investment strategy employed by the Louisiana Baptist Foundation. Currently the Foundation only uses an active management strategy.
At the previous meeting in April, the LBF’s Executive Director, Wayne Taylor, introduced the possibility of implementing a passive management style for a portion of the overall equity portfolio. Active management involves choosing managers who purchase individual stocks in specific market sectors to achieve the highest return. Passive management purchases a broad array of securities in a way that mirrors a particular market index such as the S&P 500.
Morris explained and showed graphically how a passive strategy could lower volatility in the portfolio, reduce management fees and provide a competitive return over time compared to using only active management. The majority of the discussion that followed involved ways the Foundation could purchase passive management. A motion to invest up to 40 percent of the equity portfolio in a passive strategy was passed from committee.
Later in the morning, Chairman Wayne Hunt of Grand Coteau led the Operating Committee meeting, which heard the budget report brought by the Foundation’s Controller, Barbara Bell.
The Foundation is operating within its approved budget through the second quarter of 2012, Bell reported. She also presented a request to purchase a new high speed networked copier/printer for office use. The request was presented as a motion to the committee and passed unanimously. Also the Operating Committee approved some minor changes in the language of the LBF distribution policies to reflect a change in Louisiana trust law.
The Operating Committee also heard from Rebecca Nation, partner with Payne, Moore and Herrington, LLC, who conducted the annual audit for the LBF. The firm issued an “unqualified opinion” or clean report of the Foundation’s financial records and practices, Nathan reported. She commended the staff for its cooperation with the audit process and noted that no adjustments or corrections needed to be suggested. She went on to say that the financial statements were in “perfect condition,” which is rare to find in an audit, she explained.
After lunch, the Board of Trustees heard reports from the earlier committee meetings. The motions presented by the Operating committee were passed. In its report, the Investment Committee presented the motion regarding passive investment strategy. The Board tabled the motion to allow the staff to explore opportunities to employ the passive strategy.
The Louisiana Baptist Foundation exists to educate and assist Louisiana Baptists with estate stewardship and to provide investment management to Baptist churches and entities in the state. To learn more about the work and ministry of the Foundation, to see a list of current Trustees or to review investment returns for the LBF managed funds, go online to www.LBFinfo.org.
The next scheduled Board of Trustees meeting is Oct. 30.