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By Trust for Credit Unions Mutual Funds
Earlier this month, credit union executives gathered in Boston for the Second Annual Investment Forum co-sponsored by Callahan & Associates and TRUST, mutual funds for and by credit unions. An economic overview that focused on how credit unions are emerging from the long shadow of the great recession kicked off the event.
Despite challenges such as the prospect of an era with continued slow economic growth, fiscal austerity measures overseas, the government shutdown, rising national debt, and a tepid jobs market, attendees discussed a number of positive trends that should lead to another strong year for the credit union industry in 2014.
Positive trends discussed included:
In addition to the overall economic environment, Jay Johnson, executive vice president of Callahan & Associates, shared the latest industry investment trends including that more than 37% of credit unions’ $1.07 trillion in assets are investments.
The $402.3 billion credit unions held in investments as of June 30, 2013, are primarily held in Agencies, and credit union portfolio durations have extended. This shift to a longer duration is both intentional —portfolio managers seeking higher yields are going further out on the yield curve for higher coupon income — as well as unintentional — recent rises in rates have resulted in the extension of any bond with embedded options, such as MBS, CMO, and Callable Agencies. For example a bond that was previously in the 1-to-3 year maturity bucket might now be in the 3-to-5 year maturity bucket.
As food for thought, Johnson shared three specific credit union investment strategies that are earning higher rates in the current environment and noted that, on average, credit unions with longer investment maturities are outperforming those with higher allocations in cash. As a closing thought, one credit union investment manager shared the following perspective, “Staying in cash is not conservative, it is a bet that rates will go up.”
Jeff Greenert, senior portfolio manager for Vystar Credit Union ($4.9B, Jacksonville, FL) discussed his own portfolio management decision process with conference attendees. Some of the tips he shared include:
The Investment Forum included a number of industry experts who shared best practices on topics including: commercial and secondary market loans, asset liability management, risk-based pricing for member business loans, treasury inflation protected securities (TIPS), MBS/CMO security selection, and the importance of having and following an investment plan.
For more information about the Investment Forum and other upcoming events sponsored by Callahan & Associates or TRUST, mutual funds for and by credit unions, contact us at firstname.lastname@example.org.
Trust mutual funds options keep credit unions always invested, are professionally managed, and are based on the cooperative values of credit unions. The Ultra-Short Duration portfolio is one of three options available through TRUST. Callahan Financial Services, Inc., the distributor of TRUST, provides the resources and information credit unions need to support investment decisions. Contact ustoday to learn more or visit www.trustcu.com.
Kevin Heal is Vice President of Sales & Business Development for the Trust for Credit Union (TCU) family of mutual funds.
Trust Mutual Funds (TCU) is a family of institutional mutual funds offered exclusively to credit unions. Callahan Financial Services is a wholly-owned subsidiary of Callahan & Associates and is the distributor of the TRUST mutual funds. Goldman Sachs & Co is the advisor of the TRUST mutual funds. To obtain a prospectus which contains detailed fund information including investment policies, risk considerations, charges and expenses, call Callahan Financial Services, Inc. at 800-CFS-5678. Please read the prospectus carefully before investing or sending money. Units of the Trust portfolios are not endorsed by, insured by, obligations of, or otherwise supported by the U.S. Government, the NCUSIF, the NCUA or any other governmental agency. An investment in the portfolios involves risk including possible loss of principal.
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