Bar reduces bond holdings, ups equities
Bar reduces bond holdings, ups equities
Responding to continuing record low interest rates, the Bar Board of Governors has approved a change in investment policies that reduces Bar holdings in bonds and other “liquid alternatives” and increases its investment in equities.
Investment Committee Chair Ian Comisky told the board at its July meeting that the committee has been carefully reviewing the Bar’s investments with its outside investment advisor on whether a change in investment strategy was needed.
“It’s tough in bond investments,” Comisky said, noting interest rates have continued to decline with the interest on 10-year Treasury bonds hitting 1.33 percent. “We had proposals [at the committee’s] May [meeting] around recommendations to adjust the portfolio, and we went through detailed asset allocation review and a series of different presentations.”
The result was a proposal to decrease the Bar’s bond investments, invest in other “liquid” investments including hedge funds, and reduce the portfolio’s cash reserve and increase significantly investments in large cap domestic and international stocks and moderate in median and small-cap stocks.
There will be slight uptick in the volatility of the investment portfolio, Comisky said, but over the next seven years the changes should increase the Bar’s returns from 5.7 to 6.1 percent. (If that occurs, it could mean up to an extra $1.4 million in investment earnings.)
“The bond market, as difficult as it is and the interest rates as low as they are, some shift to equities made some sense,” Comisky said.
The board unanimously approved the recommended investment policy changes.
