CapTrust: bonds pressured fourth quarter; working group urges wider equity range for reserve fund

Christine Novello, chairperson of the Rec Centers of Sun City West Budget and Finance Committee, opened the Feb. 4 meeting with a scheduled quarter-end review of the association’s reserve portfolio led by CapTrust.

CapTrust principal financial adviser Nathan Erickson said the primary driver of the negative fourth-quarter return was a sharp rise in interest rates that pushed the bond market down. “The bond market was down 3.1% in the fourth quarter,” Erickson said, adding that U.S. large‑cap stocks rose 25% for the year and fixed income was up 1.3% for 2024.

The working group that modeled alternative allocations — led by resident volunteer Miki with co‑lead Rick Rafai — recommended changing the association’s current 90% fixed‑income / 10% equity policy to a target and range that would permit more equities. “The working group believes that the current investment strategy is unnecessarily restrictive due to the big component of the Fund that is long term in nature,” Miki said, describing scenario models at 10%, 20%, 25% and 30% equity.

Why it matters: The reserve fund finances multi‑year capital projects and recurring replacements across Sun City West’s amenities. The working group and…