On Wednesday, January 26, 2021, at 6:30pm, the Consolidated Trust Fund (CTF) Annual Information Meeting convened on Zoom. Up until the first year of COVID-19, 2020, this event took place on the first Saturday of December with all attendees and presenters meeting in-person at a West Vancouver parish. For many years, St. Stephens’ meeting room was the venue and in 2019, St. Christopher’s hosted the event. In January of 2021, the first online version of the session took place via Zoom as meeting online was certainly the default during that time. The previous in-person meetings usually drew about 20 people, consisting primarily of parish treasurers and priests-in-charge of parishes with investment holdings in the CTF and the treasurers of diocesan organizations: Anglican Church Women and the Mission to Seafarers to name two. The first online meeting had 48 in attendance (60 including diocesan staff and diocesan lay volunteers) and the 2022 meeting looking back at the year 2021 had 80 registered with 53 in attendance (59 including diocesan staff and diocesan lay volunteers) . Regardless of pandemic situations, this meeting works best online. Holding the session nearly two months later than what had been the norm is beneficial as it allows for a more detailed presentation and a more compete assessment of the preceding year as well as providing more up-to-date predictions of where the markets are going in the near future.
As he did last year, Graeme Baker, the diocesan investment portfolio manager from Phillips, Hager & North (PH&N), led the session on his own, which consisted of a short presentation and Q&A. The presentation was accompanied by a PowerPoint created from the information report document which is available for downloading here and below on this post.
Questions were encouraged through the Zoom “chat” function which worked very well. The information session was organized by diocesan Director of Finance, Shailene Caparas and diocesan Treasurer, Bob Hardy, ODNW.
As of September 2021, the CTF had done very well and continued to do well through the fall and winter of 2021/2022, although there were some minor fluctuations. The figures that were shared at the 2020 report in January of 2021 were impressive as during the volatility in the bond markets, PH&N sold bonds and focused on equity buying, particularly the global equity markets which performed at 30%. This part of the portfolio was largely responsible for the overall success of the diocesan and parish investments as of January 2021, valued at 88 million (diocese, 52 million; parishes, 36 million) a 14% increase over 2019 (which was also a very good year). Graeme Baker and the investment team have continued with a similar strategy and the report from PH&N for the period ending September 30, 2021, showed an 11.7% increase in equity funds with the CTF now over 100 million dollars of diocesan and parish investments. By January 26, 2022, the numbers had increased to 102,300,000 total which breaks down to 57,7000,000 for diocesan holdings and 44,600,000 parish holdings. Although inflation is a concern it is predicted that a return of 6-8% will continue. Bob Hardy was quick to add that he never budgets for more than a 3% increase to prepare for market volatility. As this piece was updated for publication in the April, 2022 edition of Topic, the print publication of the diocese during the last days of February, the world markets were responding to the Russian invasion of Ukraine with huge increases in gas and petroleum products, the obliteration of the ruble and many other factors. Also, the Bank of Canada was about to begin with the first of a series of interest rate hikes. The CTF was already beginning to show the effects, and it is safe to say that the PH&N market predictions will be subject to changes.
The report consisted of the usual look at the different markets, bonds and equities that make up the portfolio, and PH&N’s adherence to ethical investing using Socially Responsible Investment (SRI) on behalf of all their clients, not just the diocese of New Westminster. There continues to be more focus on newer pieces in the portfolio, specifically the real estate fund that invests in corporate, industrial and multi-family real estate properties across Canada, and mortgages. During the pandemic there were some problems with occupancy in office buildings and some challenges around clients maintaining mortgage payments, however, Graeme said that of those who made interest-only payments during the difficult times, only one had not caught up on their principal payments as of the end of 2021. PH&N does not underwrite mortgages for single family homes.
Investing in the diverse Canadian market, Aritzia and Shopify continue to do well, however, technology companies on the whole have performed poorly.
The CTF has investments in green energy stocks like Ørsted the Danish green energy company and Neste the largest global producers of renewable diesel fuel, but they did not perform as well as in 2019 and 2020. The diocesan CTF portfolio holds no gas and petroleum investments. PH&N remains committed to fully integrated Environmental, Social and Governance (ESG) investing. Here is an excerpt from the September 30, 2021 official report to the diocese,
“All investment teams assess material and climate-related risks and opportunities in their investment processes. The investment teams’ evaluations of investee companies’ climate risks and opportunities consider a number of factors. For example, the issuer’s business model, industry, and location can factor into the impact of climate change on a company.
In order to assist the investment teams with their climate-related investment decision making, the Corporate Governance and Responsible investment team run quarterly climate dashboards. The dashboards provide detailed analysis of metrics and factors that may be used in investment decision making.”
Looking to the future as of the end of January 2022, a month before the invasion of Ukraine, the information presentation shared negative and positive themes:
· Omicron variant creates a huge COVID-19 wave
· Countries now locking down
· High inflation persists
· Supply chains problems
· B.C. floods slow Canadian economy
· U.S. fiscal effort fizzles
· Downgraded and below-consensus
· Omicron variant is less deadly
· Vaccination surge
· Supply chain problems improving
· Economic recovery should continue
· Still significant pent-up demand
· Inflation in the realm of peaking
Regarding investments and financial planning, the Diocese of New Westminster continues to be well-served by lay and clergy leadership, diocesan staff and the skilled and dedicated folks at PH&N led by portfolio manager, Graeme Baker.