Last of Thursday's Reports

ACEF report

The final report of the day Thursday came from the Armenian Church Endowment Fund (ACEF). Individuals and parishes can put money into ACEF, which is then invested with the help of professional advisors, to benefit any non-profit organization affiliated with the church. Each year, ACEF distributes funds from the income earned by the investments to the beneficiaries, allowing organizations to receive a steady annual income.

ACEF recently became a separately incorporated entity.

"The function of ACEF is that of a money manager, that is here to invest money the Diocese, individual parishes, and donors have invested through it," said ACEF Chairman Sarkis Gabrellian. "The role of an endowment is to help provide long-term financial health for the beneficiaries of the funds we are managing."

"For donors the interesting aspect of an endowment is they have the ability to create a fund that will last in perpetuity and to designate a specific purpose for which the income from that fund can be used," Gabrellian added, speaking of the importance of parishes tying the raising of ACEF endowment funds into their stewardship drives.

Endowments can be designated to specific organizations, and also to specific activities, such as choir training or renovations.

ACEF maintains a diverse portfolio in order to survive the ups and downs of the market. Establishing a consistent return allows ACEF to establish a consistent return to beneficiaries.

Because of its size (more than 1,000 funds with a value of $75 million) and professional advisors, ACEF is also able to get access to money managers and investments that are closed to individual parish investments or others.

Each year beneficiaries receive 4.5% of realized gains, over a trailing 12-quarter period. "What we try to do is create a certain amount of fiscal restraint so we know every year a certain amount of funds will be distributed, even though there might be a bad year in the market," Gabrellian said. "We create a degree of certainty for the budgeting process of our beneficiaries. They will have a sense for the following fiscal year what they are likely to receive from their endowment fund. And that helps them plan their budget for the next year."

ACEF is hoping to grow investments to allow distribution in lean years, grow distributions when returns allow, and grow the endowments to keep up with inflation.

"Ideally those endowments will grow, so even with a steady distribution rate you will see increasing income," said ACEF Treasurer Greg Zorthian.

Since 1999, ACEF has outperformed the market and its peer benchmarks, ACEF has had a 7.7% return, verses S&P 500's 2.3% increase. "Clearly our good advice and choices has paid off," Zorthian said. "Had you invested $10 in the indexes since 1999, they would be $14.1. But by actively managing those investments, using our advisors to pick different funds, we've seen an increase over the indexes of almost 20%. This confirms our approach to investing which is to look for the best advisors."

This year ACEF will distribute $3.25 million to its beneficiaries. "We have provided a steady, predicable, stream of income you can count on," Zorthian said. "ACEF presents a real opportunity if you're looking to get more professional management of your funds and it provides an opportunity to relieve yourself of a headache if you're doing that type of things yourself."

Saturday will begin with voting for the Board of Trustees and other leadership offices at 7 a.m., followed by a worship service. Delegates will vote again on Saturday, this time for Primate.

Posted by Jake at May 5, 2006 07:57 AM