An additional holding will become part of the investment mix that makes up Western’s Diversified Bond Fund on July 1, 2012. The fund will begin to invest in commercial mortgages – a first for Western’s retirement plans.
Western’s Joint Pension Board believes this investment is right for the times. Martin Belanger, Western’s Director of Pension investments says, “The due diligence we’ve done over the past year or so tells us that commercial mortgages offer the opportunity to add yield without increasing risk.”
The commercial mortgage portion of the Diversified Bond Fund will be managed by the Romspen Investment Corporation. Romspen is currently one of eleven fund managers for the Western Operating and Endowment fund. The company’s history of careful selection of both properties and borrowers made them the Joint Pension Board’s best choice as our retirement plans venture into commercial mortgages.
Fifteen percent of the Diversified Bond Fund (DBF) will be invested by Romspen in mortgages. While there are some challenges with this investment – specifically that mortgages are less liquid than many other investments, that will not affect a member’s ability to sell shares of the Diversified Bond Fund.
Romspen’s fees are also slightly higher than the average management fees for the Diversified Bond Fund portfolio, but the expected incremental return over the existing strategies should compensate for the higher fees.
If you are a Western Retirement Plan member who holds the Diversified Bond Fund in your portfolio either as a standalone fund or as part of the Balanced Income or Balanced Growth Fund you may want to learn more about Romspen and commercial mortgages. There are links below that will lead you to more information. If this investment does not seem suitable for your portfolio you may wish to access Target Funds or other bonds.
Don’t forget, the deadline to make allocation changes to your investments is the 25th day of each month to become effective at the beginning of the following month. This means that if you wish to reallocate any funds invested in the Diversified Bond Fund prior to July 1st, the deadline is June 25th.