An Indexed Approach to Investing

The Easton Episcopal Balanced Fund was created for the benefit of the Diocese and parishes and other entities who are a part of the Diocese of Easton. It is currently a moderate allocation (50-70% equity) mix of U.S. Equities, Foreign Equity, and Fixed Income. The investment positions for each of these classes are actively or passively managed index funds with low expenses. The performance of the Fund is measured against a benchmark of 52% total US stock market as represented by the Russel 3000 index, 13% foreign equity as represented by MSCI ACWI ex USA and a 35% fixed income allocation represented by Barclays Intermediate Credit Fund. The Board of Managers from time to time sets or adjusts tactical targets for each of these classes based on their opinions of market conditions. The fund is re-balanced quarterly. The Board also chooses the specific mutual funds or exchange traded funds to invest in these categories; these choices may also change over time.

The Board of Managers is guided in making these decisions by a Statement of Investment Policy adopted in 2015. As the Vice Chair described in his Report to the Convention for 2020, the current approach has evolved over time. In short, the fund was initially managed by a number of outside advisors. However after disappointing performance, the Board elected to pursue the current indexing approach, making only the basic tactical decisions as outlined above. As a result, costs dropped dramatically and performance improved to the point that the fund has consistently ranked in the top third or better of Morngistar’s universe of moderately allocated funds. The fund does employ an advisor, Osprey Capital Management, for day to day operations and periodic reporting, and a investment services firm, Mutual Shareholder Services, to manage the individual accounts. The custodian for the fund is Fidelity Investments.

Performance has been excellent and we have seen regular growth in assets under management to more than $34M. There are over 200 accounts for parishes, the Diocese, and related entities participating in the fund.