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Fund Overview: Objective, Strategy and Holdings

  • Earn current income by investing in a broadly diversified portfolio of fixed-income instruments.
  • Holds publicly traded U.S. fixed income securities, and fixed income securities denominated in currencies other than the U.S. dollar.
  • Holds privately placed loans originated by the Positive Social Purpose Lending Program (e.g., affordable housing and community development loans).
  • The Fund generally does not invest in companies that derive more than 10% of their revenue from gambling or from the manufacture, sale or distribution of alcoholic beverages, tobacco-related products, adult entertainment, weapons, or the management or operation of prison facilities.

Fund Managers

The following individuals are responsible for the selection and monitoring of external asset managers:

Frank Holsteen Image

Frank Holsteen

Managing Director, Investment Management

  • With Wespath since 2012
  • B.A. from Lake Forest College
Connie Christian portrait

Connie Christian, CFA

Manager, Fixed Income

  • With Wespath since 2023
  • B.S. in finance from Xavier University
  • MBA from Xavier University

Management

The Fund invests with six different investment management firms that use a combination of active and enhanced management styles. Wespath’s Positive Social Purpose Lending Program makes up roughly 10% of the Fund’s allocation.

External Asset Managers

* Signatory to the United Nations Principles for Responsible Investment

Please refer to the Investment Funds Description – I Series for a detailed description of the investment strategies used in managing the Fund.

Fund Snapshot
Inception January 1, 2019
Exp. Ratio 0.54% for 2023
Benchmark Bloomberg US Universal (ex mortgage backed securities)
Fund Assets $761 Million as of January 31, 2024
Holdings December 31, 2023
Unit Price History I Series Price History
For More Information Investment Funds Description - I Series

Performance

Fund1,2 Performance, Net-of-Fees (as of 12/31/2023)

  3 mo YTD 1 yr 3 yr 5 yr 10 yr
Fixed Income Fund-I Series 6.92% 7.98% 7.98% -2.35% 2.16% -
FIF-I Benchmark3 6.65% 6.51% 6.51% -3.00% 1.80% -

Composite1,4 Performance, Net-of-Fees (as of 12/31/2023)

  3 mo YTD 1 yr 3 yr 5 yr 10 yr
Fixed Income (FIF) Composite 6.72% 7.86% 7.86% -2.34% 2.16% 2.40%
FIF Composite Benchmark3 6.65% 6.51% 6.51% -3.00% 1.80% 2.29%

Universe Comparison

Fixed Income Composite4 vs. Peer Group Universe

Peer Group Performance Comparison

Peer group performance comparison

Annualized Performance (Gross-of-Fees)

  1 Year 3 Year 5 Year 10 Year
Fixed Income Composite 8.4% -1.8% 2.7% 2.9%
Median 6.2% -2.6% 2.0% 2.5%
Rank (%) in Universe 16th 34th 25th 34th
# of Observations 241 216 205 163

Peer Group Performance Comparison and Annualized Performance (Gross-of-Fees) data as of December 31, 2023.

Source: BNY Mellon. The adjacent chart represents the range of investment returns for the BNY Mellon Master Trust Universe (Universe) for U.S. fixed income manager asset pools. BNY Mellon provides a fund-level tracking service used to compare the Fixed Income Composite's actual gross-of-fees performance to the performance of similar asset pools of other institutional investors. The Universe includes corporate, foundation, endowment, public, Taft-Hartley and health care plans.


Footnotes

Wespath Benefits and Investments (“Wespath”) is a general agency of The United Methodist Church, a 501(c)(3) tax-exempt organization. Wespath administers benefit plans and together with its subsidiaries, UMC Benefit Board, Inc. (“UMCBB”) and Wespath Institutional Investments, LLC (“WII”) invests (or provides back-office services for) assets on behalf of benefit plan participants and beneficiaries, plan sponsors and other institutions controlled by, affiliated with or related to The United Methodist Church (the “Church”). For GIPS compliance purposes, the Firm referenced herein is defined to include Wespath, UMCBB and WII (“Firm”). Wespath claims compliance with the Global Investment Performance Standards (GIPS®). GIPS is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To obtain a copy of Wespath’s GIPS Report, please call us at 1-847-866-4100 or e-mail us at [email protected].

1 The performance shown is for the stated time period only and computed in U.S. Dollars (USD). Historical returns are not indicative of future performance. Investment performance is presented net-of-fees. See Risks and Disclosures for more information regarding fees, including how fees are reflected in performance. The investments of the funds and composites may vary substantially from those in the applicable benchmark. The benchmarks are based on broad-based securities market indices, which are unmanaged, cannot be invested in and are not subject to fees and expenses typically associated with investment funds. Investments cannot be made directly in an index. This chart was produced using data from sources believed to be accurate. The bar chart and table assume reinvestment of distributions.

2 Please refer to the Investment Funds Description - I Series for more information about each Fund. This information is for informational purposes only and is not an offer to purchase securities. The investment funds are neither insured nor guaranteed by the government.

3 Benchmark descriptions can be found here.

4 The performance presented reflects the historical performance record of the composite employed by: (a) Wespath Institutional Investments (WII) through funds called the I Series funds available as of January 1, 2019; and (2) UMC Benefit Board, Inc.an affiliated entity, through funds called the P Series funds and available to certain Institutional Investors (as defined below) prior to January 1, 2019. The composite includes the applicable P Series fund before January 1, 2019. After January 1, 2019 the composite includes both the applicable P Series fund and I Series fund (asset-weighted). The composite for the applicable P Series fund and I Series fund have substantially similar investment objectives and investment strategies and are referred to collectively as “the Composite.” The P Series funds are not available to Institutional Investors other than in exceptional circumstances agreed to by the P Series funds adviser.

Historical returns are not indicative of future performance. Returns presented are time‐weighted returns. Net returns are presented net of actual fees and expenses, including transaction costs, custody fees, sub‐advisory fees, and administrative/overhead expenses and are net of withholding taxes. The portfolios in the Composite do not pay any investment management fees to Wespath. Administrative/overhead expenses are paid by the portfolios in the Composite to Wespath.

Units of the I Series funds are available to organizations related to the Church and organized and operated exclusively for religious, educational, benevolent, fraternal, charitable, or reformatory purpose: (1) no part of the net earnings of which inures to the benefit of any private shareholder or individual; or (2) which is or maintains certain pooled income funds, collective trust funds, collective investment vehicles or similar funds for the collective investment and reinvestment of assets of certain designated vehicles available for charitable investments. All such organizations shall qualify as permissible investors in a fund excepted from the definition of “investment company” contained in Section 3(c) (10) of the Investment Company Act of 1940, as amended (and are referred to as “Institutional Investors”). Certain, but not all, Institutional Investors were eligible to invest in the P Series prior to January 1, 2019.

Allocations

Holdings-Based Sector Allocations of September 30, 2023

Sector FIF-I Actual
(%)
FIF-I Benchmark
(%)
Difference
(%)
U.S. Treasuries 13.4% 45.7% -32.3%
U.S. Government* -8.0% 1.2% -9.2%
U.S. Corporate 27.0% 24.9% 2.1%
Non-U.S. Government 7.3% 5.0% +2.3%
Non-U.S. Corporate 7.5% 8.9% -1.4%
High Yield 8.5% 5.6% +2.9%
Emerging Market Debt 9.9% 5.7% +4.2%
Mortgage-Backed Securities 8.5% 0.0% +8.5%
Asset-Backed Securities 1.5% 0.0% +1.5%
Commercial Mortgage-Backed Securities 8.3% 2.5% +5.8%
Term Loans 0.6% 0.0% +0.6%
Affordable Housing (WII) 4.9% 0.0% +4.9%
Collateralized Mortgage Obligations 0.0% 0.0% 0.0%
Other (alternatives and cash) 10.6% 0.5% +10.1%

 

Asset allocations are preliminary and subject to change. Future asset allocations may be different than those stated above.

* The negative exposure to U.S. Government is primarily the notional amount of U.S. interest rate swaps used for reducing duration. Contribution to duration is a better measure of interest rate swap exposure, and the negative exposure on a percentage contribution to duration basis is in the low single digits.

Characteristics

Fund Characteristics as of September 30, 2023

  FIF-I FIF-I Benchmark
Effective Duration 5.68 5.76
Effective Convexity 0.41 0.68
Yield to Worst* 6.33% 5.73%
Effective Maturity 8.34 8.20

* Does not reflect the deduction of fees.


Credit Quality Distribution as of September 30, 2023

  FIF-I FIF-I Benchmark
AAA 26.9% 4.9%
AA 16.8% 52.2%
A 13.0% 16.7%
BBB 23.9% 18.0%
BB 8.0% 4.0%
B 5.7% 3.2%
< B 1.9% 1.0%
NR 2.5% 0.0%
Cash 1.3% 0.0%

The fund's credit rating is the weighted average of manager ratings, some of whom use the highest available credit rating while the benchmark follows Bloomberg's index rating methodology.

Risks & Disclosures

All investments carry some degree of risk that will affect the value of the Fund’s holdings, its investment performance and the price of its units. As a result, loss of money is a risk of investing in the Fund. FIF-I is subject to the following principal investment risks: market risk, investment style risk, security-specific risk, credit risk, country risk, currency risk, derivatives risk, interest rate risk, liquidity risk and prepayment risk.

For further discussion of the Fund’s investments strategies and risks, please refer to "Principal Investment Strategies — Fixed Income Fund-I Series" in the Investment Funds Description – I Series. This is not an offer to purchase securities.

Lending of Portfolio Securities

The Fund seeks to earn additional income by lending a portion of its portfolio securities to brokers, dealers and other financial institutions. The loans are secured at all times by cash and liquid high-grade debt obligations. As with any extension of credit, there are risks of delay in recovery and in some cases even loss of rights in the collateral should the borrower fail financially. In addition, losses could result from the reinvestment of the cash collateral received on loaned securities.


Expense Ratio

The expense ratio is a measure of the annual fund operating expenses paid by the Fund expressed as a percentage of the average fair value of the Fund’s assets for the applicable year. The annual fund operating expenses consist of fees paid to subadvisor(s), and the Fund’s pro rata portion of custody fees and administrative and overhead expenses incurred by the overall Wespath Benefits and Investments organization in connection with providing investment, operating and administrative support to the Fund and the other funds available through Wespath Institutional Investments.

The Fund’s actual annual fund operating expenses and the related expense ratio can differ from year to year. Actual annual fund operating expenses may vary depending on, among other things, market events, Fund size, transaction costs, timing of Fund inflows and outflows, and applicable internal costs and third-party fees. 2023 Expense Ratios reflect a recent change to the fee calculation methodology. The methodology for calculating the funds’ Administrative and Overhead Expenses—one component of overall Expense Ratios—was changed (effective July 1, 2023) to better align with the level of resources required by WII and the overall Wespath organization to administer each I Series fund. This methodology is applicable for the entire year beginning January 1, 2024.

The Fund may also pay transaction costs, performance fees, interest expenses, taxes and fees on uninvested cash held in sweep accounts, which are in addition to the annual fund operating expenses. The annual fund operating expenses and these additional expenses are reflected in the Fund’s unit price and reduce the Fund’s rate of return. For further information about the Fund’s fees and expenses, including the fee calculation methodology change, please refer to the Investment Funds Description – I Series.