Investment Committee Minutes January 2018
Morrill Memorial and Harris Library Investment Committee
Minutes of January 23, 2018 Meeting
Present: Cindy Stableford, Betsy Ruml, Gretchen Rittenhouse
Absent: John Hawkins, Rachel Kurland (who is stranded on her icy road)
Minutes of May 23, 2017 approved.
Rachel provided an e-mail report for the Library Trustees:
Library ended 2018 with an operating surplus of $59,253 - $56,279=$2,974.
Cash balances in the bank account are significant, so the Trustees do not anticipate needing to use the 2017 endowment distribution, but no vote has yet been taken since last night’s Trustee’s meeting was cancelled due to weather. They may also need to evaluate their capital needs before making a final decision.
$10K of the Library’s $59K income was provided by the Friends in support of Library programs.
Cindy reported for the Friends:
The Friends made an $800 contribution to the endowment in June 2017.
Some membership and leadership changes this year. Looking for new members.
Report from the Chair (Cindy):
Cindy presented her Annual Report to the Town. Approved.
Cindy presented her calculations re year-end transfers to the restricted funds. Approved.
Cindy transferred $4,500 to the Money Market fund on 7/14/17 to have cash available if the Library Trustees decided to take the annual distribution. All transactions made as per 5/23/17 minutes.
Currently around $15,000 cash in unrestricted accounts - $10K for general liquidity and $5K for the potential endowment distribution.
We reviewed the annual distribution calculation. $7,319 is available for distribution per our model. With the $6,729 available last year but not distributed to the library, there is currently $14,048 available for distribution (and thus restricted).
Betsy reviewed the portfolio.
The portfolio is up 14.58% for 2017 on a simple basis, 9.18% since May. The balance as of 12/31/17 was $310,226.87. (As a benchmark, she noted that the Vanguard Wellington Fund is up 14.28% for 2017.)
Growth stocks provided the biggest returns, bond funds lagged, and REITs performed relatively poorly.
Currently 67% equity/33% FI, roughly the same as in May and within our target allocation. The portfolio continues to be well diversified.
We considered –and approved - the following recommendations:
Leave the overall allocation as is.
Since evidence points to possible interest rate increases in the near future, move some bond investments from intermediate term funds to short term funds. We may give up some returns if rates don’t rise but will be better protected if they do. Betsy recommended moving $36K from VBTLX to VSTX (Vanguard Short Term Bond Fund). This fund could also serve as a holding place for potential library distributions from the endowment while still earning a modest return.
The Committee discussed the issue of endowment distribution. Betsy noted that if the library is not taking the distribution over the long term, we will have to devise a strategy with the Library Trustees to deal with large cash/restricted balances. Cindy will send an e-mail to the Trustees confirming the available balances for distribution and opening the conversation for long-term planning. If Cindy hears that there is interest in using the distribution, then the Committee will reconvene to determine which equity holdings to sell in order to maintain our target asset allocation.
The meeting was adjourned. Next meeting is scheduled for Tuesday, May 22, 2018 at 9AM at the Library.
Respectfully Submitted,
Gretchen Rittenhouse
Secretary
