Church investments fall victim to market

Several Anglican Church of Canada investment funds were adversely affected in 2002 by poor stock market performance, including the pension fund, consolidated trust fund and Anglican Foundation.

The pension plan ? which serves more than 2,000 retirees ? dismissed one of its fund managers and its asset consultant and withdrew $43,000 from its endowment fund?s capital account to make a distribution to retirees.

Anglican Foundation, which supports parish building projects and administers bursaries and scholarships, was unable to make as many grants as it would have liked, according to the executive director, Canon John Erb.

The consolidated trust fund, which manages investments on behalf of General Synod, some dioceses and some organizations, had to cut distributions to some dioceses, said General Synod treasurer Jim Cullen.

Last year?s abysmal stock market returns affected non-profit organizations around the world. The World Council of Churches last January announced it was cutting its budget and staff to offset poor investment returns. In 2002, the Toronto Stock Exchange?s main market average declined 14 per cent and the Dow Jones Industrial Average dropped 16.8 per cent.

?2002 and 2001 were very unusual years for the investment markets,? noted Jenny Mason, director of pensions for the Anglican Church of Canada, in an interview.

The three church entities were affected as follows:

The pension committee reported to Council of General Synod (CoGS) in May that the market value of its fund as of Dec. 31, 2002 was $431.2 million, down from $468.5 million at the end of 2001.

The fund, the bulk of which is invested in equities, retains five managers, but terminated its relationship with Edinburgh, Scotland-based Martin Currie Investment Management Ltd. ?The trustees have had serious concerns about the shortcomings of Martin Currie in managing the non-North American global equity funds. They have underperformed over the last four years and their ranking versus the universe of managers was poor,? said the pension committee?s report to CoGS. The funds formerly managed by Martin Currie were transferred to another fund manager, Letko, Brosseau & Associates Inc., based in Montreal.

The fund committee also reported that the board of trustees terminated the services of Towers Perrin as asset consultant and retained Mercer Investing Consulting. Asset consultants provide information and advice on fund managers, said Ms. Mason. The pension fund was unhappy with the level of service delivered by Towers Perrin, she said.

Because of the market performance, the trustees also approved the withdrawal of $43,000 from the $2.9 million endowment fund to provide a distribution for retirees.

The Anglican Foundation, which is incorporated separately from General Synod, showed an overall investment loss of $44,928 last year, compared with a gain of $378,529 in 2001, according to a report by Mr. Cullen. Total return for the year for the foundation?s $2.9 million development fund was ?3.69 per cent, while the $4.7 million endowment fund showed a return of 0.83 per cent. The endowment fund was spared much of the stock market?s decline since it is about 75 per cent invested in fixed-income securities, said Mr. Cullen.

Because of ?investment difficulties and huge demands,? the foundation had to turn down some parishes? applications for grants, said Mr. Erb. The fund recorded $11.028 million in assets as of Dec. 31, 2002, compared to $11.404 million in 2001.

One concern cited by Mr. Erb and Mr. Cullen is the foundation?s wildly varying source of income from bequests and donations ? $552,040 last year compared to $3.775 million in 2001. They said the foundation is moving toward a greater emphasis on planned giving, which urges donors to name the Anglican church in their wills.

General Synod?s Consolidated Trust Fund saw its balance decline to $10.422 million at the end of 2002, from $12.888 million in 2001, however, Mr. Cullen cautioned that about $2 million had been withdrawn from the fund for expenses connected to residential schools lawsuits. A better indicator of performance, said Mr. Cullen, is the market value of units in the fund, which declined to $20.34 per unit as of Dec. 31, 2002, from $21.21 in the previous year, down 4 per cent.

The fund makes investments on behalf of some dioceses and distributes income back to those dioceses, but last year the distributions declined and ?some dioceses were hurting,? said Mr. Cullen.