General Board Investments End on High Note in 2005
For Immediate Release
Evanston, Illinois, January 17, 2006
Contact: Mike Lee, Managing Director—Communications
(847) 866-4561 or mlee@gbophb.org
Despite the impact of Hurricane Katrina on the country, surging gasoline prices, predictions of a housing bubble and reduced consumer spending, the U.S. economy proved more resilient in 2005 than what analysts expected. In fact, according to The Wall Street Journal, 2005 economic growth has been robust and the stock market even experienced a year-end rally. Comparatively, the General Board's investments also garnered positive results.
"Our year-end performance for 2005 can be summed up as excellent. All of our actively managed funds exceeded their benchmarks, although the Balanced Social Values Plus Fund, slightly outperformed its benchmark. Each of the four asset classes within the Multiple Asset Fund (MAF) also exceeded their respective benchmarks. Our international managers, in particular, had outstanding results," explains Chief Investment Officer Dave Zellner.
MAF returned 8.6% net of fees. The benchmark returned 6.9%, which means MAF outperformed the benchmark by 1.7%. According to Zellner, 2005 marks the second best year for MAF compared to its benchmark over the past decade. Over the last 10 years, MAF (formerly DIF) returned a compounded average annual rate of return of 10.1% (before investment management and operating fees) compared to the benchmark return of 8.1%. "We expect that this will place us at or very near the top quartile of all institutionally managed funds, but we have to wait until the end of January for the final results," says Zellner.
2005 Year-End Performance of General Board Funds
| General Board Fund |
Rate of Return |
Benchmark |
Rate of Return |
| MAF |
8.6% |
Blended benchmark |
6.9% |
| Domestic Stock* |
5.4% |
Russell 3000 Index |
6.1% |
| Domestic Bond* |
2.0% |
Lehman Brothers Aggregate U.S. Bond Index |
2.2% |
| International Stock |
17.8% |
MSCI EAFE Index |
13.5% |
| BSVP |
4.8% |
Blended Benchmark |
4.6% |
| Inflation Protection* |
2.7% |
Barclays Capital U.S. Inflation Linked Bond Index |
2.7% |
*These are passively managed funds. Passive funds are not designed to beat the benchmark, they are designed to match the benchmark, less fees.
Zellner cites that investment performance was primarily fueled by strength in the international stock markets resulting from strong economic growth throughout the world, particularly in developing countries. Notable was the performance of the Japanese market, which rose 45% (25% when translated back to the dollar). Additionally, many stock markets of the smaller emerging countries rose significantly. Examples include Russia (up 73%), Brazil (up 56%), Mexico (up 49%) and Korea (up 57%).
The U.S. markets were more subdued with modest mid-single digit increases for most of the popular U.S. stock indexes. Economic growth remained steady though the potential impact from continued interest rate increases by the Federal Reserve may have influenced investor enthusiasm for stocks.
Bonds produced low single digit returns again due to the Federal Reserve interest rate increases.
"Overall, all of our investment managers produced positive investment returns. Only one General Board investment portfolio (international bonds) experienced a loss in 2005," says Zellner.
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