Brethren Benefit Trust’s investments post strong returns
throughout the 1990s, including 1999

May 17, 2000 Elgin, Ill.

Common stock investments managed by the Church of the Brethren Benefit Trust concluded 1999 with a 19.1 percent gain, capping off the remarkable decade of the 1990s.

During the 1990s, the continuous expansion of the U.S. economy led to unprecedented growth in U.S. investments. This, in turn, meant strong returns for members of the Brethren Pension Plan and the Brethren Foundation, particularly for those whose asset allocations have included common stocks.

However, it takes more than just riding the economy to receive exceptional returns on investments. During the early 1990s when the record-breaking growth spurt of the U.S. economy was at its infancy, BBT revamped its asset management service utilizing a successful investment model.

First, BBT created additional investment funds. “The Pension Plan now offers four funds while the Foundation has six funds with more under development,” said Darryl Deardorff, BBT’s chief financial officer. “These expanded choices offer investors the ability to distribute their assets in a manner that best suits their investment goals.”

Volunteer in waiting. Allen Hansell, director of Ministry for the Church of the Brethren General Board, is excited about the prospects of being able to serve in volunteer positions within the denomination upon his retirement, thanks to the security he’ll have from a healthy pension account from the Brethren Pension Plan.

“BBT also distributes its own investments in this manner, selecting the most appropriate funds for the respective investment,” Deardorff said.

The other piece of the investment strategy was for BBT to diversify its investment managers. During the decade BBT systematically added to its original fund manager until there were six investment managers from different firms — one short-term; three domestic equity using value, growth, and core styles; one international equity; and two bond, using active duration and duration neutral styles.

“This diversification protected our investors against extreme performance volatility while helping them to attain excellent returns,” said Deardorff.

Pension Plan

For the 1990s, the compounded growth of the Brethren Pension Plan’s Common Stock Fund was 344 percent. Its Balanced Fund, which includes a mixture of stocks and bonds, yielded 219 percent. The Short Term Fund, which includes fixed investments that mature in two years or less, increased 48 percent.

For 1999, the Common Stock, Balanced, and Short Term funds increased 19.1 percent, 11.3 percent, and 5.3 percent, respectively. The Bond Fund, which became available to Pension Plan members in mid-1999, posted a growth of .2 percent.

Brethren Foundation

Returns for church agencies that have their assets managed by the Brethren Foundation experienced the same impressive returns. The Foundation’s long-time Domestic Stock Fund posted a compounded growth in the 1990s of 386 percent. Decade totals for the Balanced Fund, Short Term Fund, and Bond Fund were 243 percent, 60 percent, and 84 percent, respectively. Two other funds, a Domestic Stock Index Fund and an International Index Fund, which were launched for Foundation clients in 1998, have lifetime compounded growth of 32 percent and 35 percent.

For 1999, the various funds and the percentage of their growth were as follows:
• Domestic Stock Fund, 19.1 percent
• Domestic Stock Index Fund, 17.9 percent
• International Index Fund, 26.5 percent
• Balanced Fund, 10.6 percent
• Short Term Fund, 5.1 percent
• Bond Fund, -1.3 percent

Crunching numbers

This tremendous overall growth has meant that many pastors and denominational staff, as long-time members of the Brethren Pension Plan, have watched their retirement monies grow by unprecedented amounts over the past decade.

For Allen Hansell, a former pastor and district executive who now serves as director of ministry for the General Board, his 23-year participation in the Pension Plan plus his asset allocation of 60 percent in common stocks means his Pension account has grown to a sizeable amount, especially over the past five years.

“The financial security is important,” said Hansell. “What this means to me and my family is that I will be able to retire with an excellent monthly income when that time comes. More important is the fact that the financial security from my retirement benefits will allow me to serve the church in the future as a volunteer.”

For a Brethren Foundation client such as Mount Vernon Church of the Brethren near Waynesboro, Va., investments in the Foundation’s stock funds led to nearly a 50 percent growth in its $100,000 mission and education endowment fund in 2 1/2 years, giving the congregation unprecedented outreach potential.

Applicance shopping. Earline Lee examines a new clothes dryer at the Franklin, Va., Sears store in February along with her daughter, Cynthia Person. Earline lost all of her appliances during the flooding brought last fall by Hurricane Floyd. On this day the two would receive several appliances from Dorothy Mathias (left), Mount Vernon Church of the Brethren clerk, and several other Mount Vernon members on behalf of the church.

Using the fund’s revenue, the congregation purchased over $5,000 in appliances donated to Franklin, Va., flood victims; donated $2,000 for a Habitat for Humanity construction project; gave $2,000 for a local weekday religious education program; sent two community children to attend Camp Brethren Woods; and funded $1,000 scholarships for the church’s three college students. In addition, earnings on the congregation’s other endowment funds have paid for central air conditioning and a disability ramp, a computer upgrade, and supplied $5,000 in seed money to start a youth ministry program. And in May, the congregation was poised to donate another $14,000 for a number of mission and outreach projects.

“We wouldn’t have been able to do any of these things without these earnings,” said Grant Simmons, Mount Vernon’s endowment treasurer.

And doing these things has led to the congregation’s doing more. For example, having twice traveled to Franklin to purchase appliances for families in need, pastor Bob Johnson and church member Steve Hewitt in January decided to give of themselves, too. For one week the two worked at rebuilding the interior of a house as part of a Brethren disaster response project.

The giving of themselves, a commitment inspired by their church’s outreach giving, is a commitment both men hope to continue for the rest of their lives.