January 19, 2021 – Koror, Republic of Palau The COFA Trust Fund ended calendar year 2020 with a total balance of $298 million, achieving a total return of almost 8 percent for the year. As of today, January 15, 2021, the Trust Fund value stands at $303,561,945.
“We are extremely pleased with the earnings of the Trust Fund in 2020, particularly in light of the global COVID-19 Pandemic which resulted in the equity markets most severe decline in decades, and a global recession” said Lindsay Timarong, AIFA®, Chairperson of the Board of Trustees.
Comparatively, the Fiscal Year (FY) 2019 Trust Fund ending balance was approximately $270.6 million, adjusted for withdrawals, indicating fund growth of over $27.2 million, or 10 percent, 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 $20 million while net earnings exceeded $19.5 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 $121 million to the ROP National Government, while earning approximately $$282 million, net of fees.
A notable change to the Trust Fund’s investment policy that has recently been implemented 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.
The Board is proud to report that most of the Trust Fund’s investment managers are already signatories to the UN PRI and the remaining investment managers are in process of becoming a signatory to the UN PRI.
Other notable actions undertaken by the Board of Trustees during the year included the replacement of several investment managers which had been underperforming mutually agreed upon performance benchmarks for an unacceptable length of time; the addition of global listed infrastructure to the Fund asset allocation; and, the change from active to passive investment management in the case of non-U.S. fixed income, resulting in lower fees.
ROP COFA Trust Fund surpasses $300M
