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Foundational knowledge: How Your Bethel Trust is Managed
By Angella Hjelle, Executive Director and Corporate Counsel of the Bethel Foundation
Q: If I were to establish a charitable remainder unitrust, how will the funds be invested?
A: The investment process at the Foundation begins with the qualified Investment Committee of the Foundation Board of Governors. The Investment Committee is responsible for selecting investment managers and account custodians for all assets contributed to Bethel. To safeguard such assets, this committee is responsible for investment policy, asset allocation decisions, and monitoring investment returns.
Q: Who is on the Investment Committee?
A: We are intentional about having individuals on this committee who are highly skilled in the investment arena. The current board members who serve on this committee are: Mark Orgel, executive vice president, Dain Rauscher; Don Constable, self employed in investments; Jerry Twogood, retired corporate executive, Deluxe Corp.; Linda Goodwin, senior vice president, Wells Fargo Bank; Sung Won Sohn, senior vice president and chief economist, Wells Fargo Bank; Randy Monson, Monson Insurance; and Donald Benson, executive vice president, Marquette Bancshares, Inc.
Q: What investments are used for the trust accounts?
A: Each trust is set up in its own separate account. Several factors are weighed to determine the appropriate asset allocation for the account. These factors include the age(s) of the trustors, the term of the trust, and the payout rate of the trust. After considering these factors, an asset allocation is determined for the account. The majority of our trusts have an asset allocation of 60 percent in equities and 40 percent in fixed income.
Additionally, as a fiduciary, we are bound to follow the prudent investor rule for all of our accounts and the committee adheres strongly to maintaining diversified portfolios. This means that portfolios encompass many strategies, including large capitalization, small capitalization, growth, value, domestic, international, emerging markets, corporate fixed income, and government securities. This strategy is intended to decrease the volatility and risk in the portfolios while maintaining an appropriate level of investment return.
Q: What could I expect as an annual return on our trust portfolio?
A: We base our assumptions on a long-range historical return of between 8 and 9 percent. Of course, some years our portfolios out-perform this estimate, and unfortunately, some years we under-perform this target. We were not exempt from the market's recent downturn. However, our under-performance was not as severe as the general market indices, such as the S&P 500.
Q: Who decides on the actual investments in the account?
A: The Investment Committee interviews, selects, and monitors a professional investment manager for all of our accounts. Currently, we have employed the consulting firm of Jeffrey Slocum & Associates, Inc. in Minneapolis to provide the committee with recommendations for managers for each asset strategy.
The investments at the Foundation are managed by skilled professionals on many levels. If you would like more information on our investment process, please contact Angie Hjelle at 651.638.6548. A member of the Investment Committee would be pleased to thoroughly explain this process.