COMMUNITY NEWS

 

In 2012, the Las Sendas Board of Directors established a Finance Committee to research investment options to take proactive steps toward optimizing the use of reserve funds.  Understanding the prudent approach for associations, the Board and Finance Committee agreed to invest the reserve funds to mitigate the erosion of purchasing power caused by inflation.  The Board realized that keeping the reserve funds in low-interest-bearing accounts like checking accounts, money market accounts, or CDs may provide safety but often fails to keep up with inflation, resulting in a decrease in real value over time. 
 
In March 2012, the Board and Finance Committee modified the investment policy to include specific parameters for the investment advisor to follow. At least 70% of the funds must be held in Fixed Income, including various Bonds, Fixed Income Funds/ETFs, US Treasuries and Money Markets. No more than 30% of the funds can be held in Equities, including Stocks/ETFs. 
 
The Association began investing reserve funds in November 2012. Before then, the Reserve Funds were only invested in CDs or were kept in checking and money market accounts. The ‘managed’ investment balance was initially funded from (1) $3.4 million of matured or sold CDs from Nov 1, 2012, through 2015, and (2) $4.3 million of LSCA cash from the Association’s checking accounts. 
 
From 2012 through 2020, Wells Fargo served as the Association’s investment advisor and the “custodian” of the invested balance. In 2020, the Board approved the Finance Committee’s recommendation to change advisors, and our investments were moved to Prudent Man Advisors (PMA).  PMA was chosen in part due to their specialization in nonprofits and fixed asset investments. 
 
Has the Association gained or lost money with this investment plan?  
 

• Return on investments between November 2012 and December 2022: $1,720,273 (Gain). An average of 1.85% annually.
• Return on investments between January 1, 2023, and June 30, 2023: $451,000 (Gain) 

 
Based on the information above and the history outlined, the only other way $1.7M would have been obtained is with increased assessments.
 
VIEW INVESTMENT POLICY
 

 
 
 

 

Frequently Asked Questions
 
Where can I learn more about our investment performance?
In accordance with the General and Financial Accounting Standards Board, our investments are reported on the Profit and Loss Statement for our reserve fund every month.
You can find these on our website at mylassendas.org/documents once approved by the Board. 
 
Did we lose $1.4 million dollars? 
No, the Association did not lose $1.4 million dollars. However, like all investments, the portfolio's value rises and falls over time (see photo, above). In 2022, a rare event took place. Not only did equities fall in value, but so did government bonds. Specifically, the US Long-term Government Bond (20-Year Bond) had its worst calendar year return since 1926 (2023 Ibbotson Yearbook). As a result, the portfolio's value was temporarily reduced by $1.4 million. Even with the loss of value in 2022, the return on the investments between November 2012 and December 2022 was still a positive $1.7M. Because the Board did not withdraw the investments, the 2022 loss in value was not realized. Notably, the market has changed in 2023, and the value of our investments has already risen $451K (as of June 30).
 
Does the Board decide what our money is invested in? 
No. An investment advisor decides what investments to purchase based on the Association’s Investment Policy. The Finance Committee meets regularly to ensure that the financial advisor is following these guidelines.