County trust fund gains

Published 10:32 am Monday, February 13, 2017

Lafayette County will receive a distribution in March thanks to the reserve and trust fund investment showing a significant gain in 2016.

Green Square Capital, the investment firm in charge of the $20 million fund created following the sale of Baptist Memorial Hospital, gave the trustees of the fund some good news last week. The fund gained 5.7 percent to end the year, exceeding the projected 4.8 percent. Over the last three years, the county has received a total of $1.1 million in distribution from the fund.

The investment balance for the year stands at $20,745,002, while the economic value of the trust with distributions is $21,862,285. Through Friday, Feb. 3, the fund was up more than $2 million since inception.

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Green Square officials credited a less volatile market and the trustee’s decision after the second quarter to move more of the trust fund into bonds instead of more risky stocks.

“We are very pleased with performance of the fund,” Green Square’s Steve Sisom told the trustees, who are also the Lafayette Count Board of Supervisors.

Supervisor Jeff Busby said overall he and the trustees were pleased with the direction the fund is going and reminds constituents the fund is a long-term investment and “not a get rich quick thing.”

“We have been entrusted with these funds for future generations,” Busby said.

In order to maintain that 5.7 percent investment increase, the trustees discussed how conservative the board should be prior to the expected distribution in order to protect their gains.

According to county officials, the distribution is needed to subsidize the 2017 budget. The county didn’t receive a distribution in 2016 due to the fund falling below the $20 million level. The county received $600,000 in distribution in 2014 and $500,000 in 2015.

Sisom was asked how the election of President Donald Trump could affect investments in the future.

He is expecting a corporate tax cut and believes long-term equity market will see a 7 percent to 7.25 percent return, while in the short term see a 6-7 percent return.

“I think a Trump administration will swing the pendulum of government regulation back with less regulatory drag on business in the U.S.,” Sisom said. “I think that will be a benefit in the equity market over the next year.”

He also expects the fed to increase the interest rate another “two or three times over the next year.”

“We’ll be watching that very closely,” Sisom said. “We don’t expect a huge uptick in inflation for two or three quarters, but we’ll be watching that very closely too.”

So what is his biggest worry about the new administration?

“I worry we have a former real estate developer really comfortable with debt because he’s run his business highly leveraged,” Sisom said.