St. Matthew Evangelical Lutheran Church Endowment Fund (SMEF)
SMEF investment objective & strategy: Since income from the endowment account is used to help fund the WELS and St. Matthew accounts, it was decided that the overall objective of the SMEF should be 'Income with growth.'
To help define an income goal for the SMEF, it was decided to use the '30 year fixed mortgage rates' as the minimum target. As fixed mortgage rates change over time, the SMEF income goal would also follow suit. For reference, the current rate for '30 year fixed mortgages' is hovering around 4%.
For an investment strategy the SMEF will use the Sherman Bull/Bear Indicator as a predictor for bull & bear markets (as approved by the SMEF on August 7, 2012). During bear (“down”) markets the endowment portfolio will consist of conservative investments (such as a money market, which is ultra conservative with a low return) and during bull (“up”) markets the portfolio will consist of less conservative investments to take advantage of rising stock prices.
Risk or Volatility Indicator “Beta”:
Stocks have a 'Beta' value which indicates how volatile the stock is relative to the overall stock market. For instance, an S&P 500 Index (which reflects the performance of the overall US stock market) would have a Beta of 1.0 and a money market fund would have a Beta of zero (because a money markets value is not influenced by the stock market). At the meeting it was decided that Beta values would be used for the SMEF investment strategy as specified below:
Risk or Volatility Indicator “Beta” continued: