January 9 Investment Committee Minutes
Morrill Memorial and Harris Library Investment Committee
Minutes of January 9, 2024 Meeting
Present: Cindy Stableford, Betsy Ruml, Gretchen Rittenhouse, John Hawkins, Rachel Kurland, Rebecca Seibel
Approved minutes of the 5/23/23 meeting.
Mike Hemingway from Mascoma Wealth Management reviewed the portfolio results and position:
· Good bounce back from 2022 with about 14% total return for the year. Since inception, beating the benchmark by 20 basis point, however, this year 1.5% below benchmark. Probably because the Library portfolio has a lower equity allocation than the benchmark model. Betsy asked if this was because of underperformance of the value fund, but Mike said it was not. Cindy noted that the Trustees of Public Funds did 300 basis points better than benchmark but they have a much higher allocation of equities. Betsy and Cindy will meet in person with Mike to review details and further understand what is driving the returns.
· Purchases and Sales – Allocation is OK, so not much activity. Sold out of Green bonds (BGRN) and Kensho Clean Power (CNRG)in June and replaced with Nuveen large cap value (NULV) to increase exposure to large cap and ESG Aware (ESGD). Replaced Pimco enhanced short maturity (EMNT) with JP Morgan Ultra short (JPST), which is a better performer.
· Betsy asked re ESG v. non-ESG? Good fit if they align with values but DSI Social 400 has not been doing as well as S&P 500. Estimated that all ESG would reduce returns by about $3-4,000/year. Mike does not recommend 100% in ESG funds, and states that we could still be aligned with ESG values with non-ESG funds. Mike said that one option is to have a % of portfolio in ESG. The Trustees Investment Policy guideline currently on file with MWM says to hold at least 25% of portfolio in ESG
At this point, Mike left the meeting.
Rachel provided an update report for the Library Trustees:
1. Re 2024 budget, asked for the same amount as last year from the Town but have also budgeted to use approx. $10K in interest from the Fidelity account and the CD due to increased costs and decreased fundraising.
2. Not many places to cut. The Trustees remain committed to programming but may try to use more local presenters.
3. Rebecca asked if the endowment return available to the Library per the distribution formula is kept separately. Cindy said no, but it is tracked at each year end and there is a decent cushion. Betsy is of the opinion that the Library should use this cushion rather than asking for more from the Town, about which there was general agreement.
4. Rachel will also talk to the Trustees re ESG. Probably OK keeping with the current ESG level despite the $3-4K “penalty”. Betsy noted that Mascoma has flexibility in their charge to go outside strict ESG fund investments.
5. Rachel distributed the 2024 Library budget.
Rebecca reported for the Friends:
1. The Friends have $28K in assets, including a $15K CD.
2. Gave $9,582.52 to Library in 2023 and plan to cover one more $220 bill.
Report from the Chair (Cindy):
1. John Hawkins is stepping down from the Committee due to other commitments. He’ll be missed! There was a discussion about John’s replacement. Agreed that another Committee member was a good idea and all agreed to provide ideas before the May meeting. Betsy suggested that another member of the Trustees on the Committee would add to the Board’s understanding of the endowment. Rachel will ask Kevin Lynch, a new Library Trustee. If he is not interested, we will reach out to other community members.
2. Cindy distributed draft Annual Reports, noting that there are some complications due to different accounting methods between Fidelity and Black Diamond. Cindy will use the Fidelity Report method.
3. The Swan/Diamond/Ordway funds were a little under water so transferred $1,000 from endowment to bring them up to the $18,000 balance needed. Moved all restricted funds to Fidelity Government Cash Reserves (FDRXX) which contains all government instruments. Current Balance is $18,091.
4. Discussion re distribution calculation – if assume 3-4% inflation, then about $100K is available for distribution to the Library per YE 2023 calculation.
The meeting was adjourned. The next meeting date was set for Tuesday, May 21 at 8AM using Zoom.
Respectfully Submitted,
Gretchen Rittenhouse
Secretary
