(2020, January 30 – Koror, Republic of Palau) The Palau Compact of Free Association (COFA)Trust Fund ended calendar year 2019 with a total balance of approximately $298.4 million, achieving a total return net of fees of 19.64 percent for the year according to information from the COFA Board of Trustees.
“We are very happy with the earnings of the Trust Fund in 2019, particularly following the volatility seen in 2018,” said Lindsay Timarong, AIFA®, Chairperson of the Board of Trustees.
Fiscal Year 2019 which ended on September 30, 2019, showed Trust Fund Ending balance at $282.40 million. Compared to calendar year-end (December 31,2019) with a balance of $298.4 million, shows a fund growth of over $16 million or 6% during the first quarter of the current fiscal year.
During the calendar year, total payments from the Trust Fund to the ROP National Government equaled $14 million while net earnings exceeded $49 million. Management fees and all Fund related expenses totaled 0.46 percent of the overall Trust Fund. Since the Trust Fund’s creation under the COFA in 1994 with $70 million, the Fund has paid $101 million to the ROP National Government, while earning approximately $246 million, net of fees.
A notable change to the Trust Fund’s investment policy that has recently been approved by the Board is the revision of its investment manager selection criteria to include the requirement to be a signatory to the United Nations Principles of Responsible Investment (UN PRI). The UN PRI is a global organization that encourages and supports the uptake of responsible investment practices in the investment industry.
The Board strongly believes that as fiduciaries with oversight over valuable assets invested for the benefit of the people of Palau, it is their responsibility to take a “sustainable” investment approach to the management of the COFA Trust Fund. Sustainable investing integrates good Environmental, Social and Governance (ESG) practices, currently being practiced in the Republic, into the management of its Trust Fund assets. A growing body of research has demonstrated that poorly managed ESG risks, such as natural resource efficiency, human capital/labor management, and board independence can have a material impact on asset values. Therefore, the Board endeavors to adopt a policy of “integration” in addressing ESG factors. Under this approach, ESG issues are explicitly and systematically integrated into traditional investment analysis and decisions, to better manage risks and improve returns. Quite often this is implemented as a best-in-class approach by identifying and investing in companies that are the highest ESG performers within a sector or industry group. According to a recent CFA Institute study, “integration” is the commonly used method for implementation of sustainable investing. The Board is proud to report that nine of the Trust Fund’s fourteen investment managers are already signatories to the UN PRI and the remaining investment managers are either in process or starting the process of becoming a signatory to the UN PRI.
The report also states that the COFA Board of Trustees has recently reorganized in accordance with its Bylaws and has changed its governance structure. The new officers of the Board as of December 9, 2019, are Lindsay Timarong, Chairperson; Keiden Kintol, Vice Chairperson; Ngiratmetuchel Reagan Belechl, Secretary; and Regis Emesiochel, Treasurer. Finally, the Board of Trustees regretfully bids farewell to one of its most senior voting members, COFA Board Former Chairperson Ms. Mingrang Kloulechad. Trustee Kloulechad has formally submitted her resignation from the Board effective January 31, 2020. She has served on the COFA Trust Fund Board since her appointment by President Tommy E. Remengesau, Jr, and subsequent Senate confirmation on March 18, 2014, shortly after RPPL 9-20, the legislation reconstituting the COFA Trust Fund Board, was signed into law. Ms. Kloulechad served as Chairperson of the Board of Trustees from October 2017 to December 2019 and has been instrumental in the development of the Board’s fiduciary role and in ensuring the sound investment of the Trust Fund’s assets. Her leadership in public service is commendable and her presence on the Board will be missed by all Trustees.