Expected to last beyond 2044 if managed well
Palau Compact Trust Fund has grown to $281.6 million from the initial investment of $70 million revealed COFA Board members at Wednesday weekly press conference.
The Board also revealed the $10 million surplus from government revenues that was budgeted to be invested has not been invested into the money market yet.
“The Board is still to make a decision on how it is to be invested,” expressed COFA Board of Trustees Chairwoman Minrang Kloulechad.
The impact of the recent fallouts in the US stock market did not impact the Trust Fund too badly according to the COFA Board.The Board attributed this resiliency to COFA Trust Funds’ Investment Policy and the diversification of its investments.
The Board revealed that as part of their mandate to monitor the well-being of the Funds, they undertake review of each fund manager including visiting their business operations and meeting with personnel.
“This is to ensure that we do a better monitoring job. We don’t just listen to what they present us, but we also visit their place of business so that we have a much better idea of how they are doing,” stated Chairwoman Minrang Kloulechad.
Due to limited budget, the physical site monitoring process is conducted in two phases, meeting with one set of fund managers and then another.
This past month, all the Board members including the two ex-officio members from Senate and House of Delegates visited 9 money managers including the Fund Consultant to conduct their own assessment.
“We meet with those that are underperforming as well as those performing well to better understand what they are doing in order to ensure that we meet the stated IPS of 6%,” reported Trustee Keiden Kintol.
“We also hear from them their strategies for addressing what we have seen happen in the market to ensure that funds are safe or minimally impacted.”
When asked whether the current 6% benchmark that has been set is enough to ensure sustainability of the Fund since it changed purpose to Perpetual Fund, Chairman Kloulechad expressed that based on certain investment simulations, if 6% is met, Palau will still have $100 million in the Trust Fund by year 2044.
Answering whether the law which now allows Palau government to draw down $15 million each year instead of $5 million will impact the viability of the Trust Fund, Kloulechad didn’t give a direct answer but she said she was confident that lawmakers are aware of this.
Delegate Jonathan Isechal, Chairman of House Ways & Means Committee and ex-officio member of the COFA Trust Fund, was very optimistic that the fund will not be depleted.
“The law say we may withdraw the funds not must,” asserted Delegate Isechal. “I think we have demonstrated that we can be conservative with our Trust Funds. We could have withdrawn the funds since 2010 when the agreement was signed but we didn’t. We found other ways to raise funds,” added Isechal.
COFA Trust Fund Chairwoman Kloulechad expressed her appreciation to OEK Senate President Hokkons and House Speaker Anastacio for supporting their request for funds for site monitoring of the fund managers.
“This is the first time since I got on this Board that the full Board was present at this very important visits,” stated Kloulechad.
COFA Trust Fund Board of Trustees are appointed to monitor, oversee management and continued viability of the COFA Trust Fund according to the law. (L.N. Reklai)