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March markets hit trust: $50 million decline, big draws from international equities to fund benefits
Summary
Kellum LLC told the board March produced sharp losses across public markets—domestic equity down 5.17%, international nearly 11%—and staff rebalanced roughly $17 million from international equities into fixed income and cash; fiscal year-to-date the fund remained ahead of its blended benchmark.
Alex Browning of Kellum LLC presented the trust's March investment performance, saying March was "a really ugly month" as rising oil prices and inflation expectations tied to the Middle East conflict pressured both equities and bonds. Browning reported that public markets fell in March and estimated the trust lost about $50 million for the month.
Browning provided asset-class specifics: the domestic equity composite declined 5.17% (versus the Russell 3000), international equities fell nearly 11%, private equity showed preliminary positive estimates for the month, and fixed income was modestly below benchmark. At the total-fund level, fiscal year-to-date return was 5.24% compared with a 3.84% blended benchmark, leaving a roughly 140-basis-point cushion.
To preserve liquidity for near-term benefit payments and to rebalance after international equity appreciation, staff executed a rebalancing that removed roughly $17 million from international equities and allocated proceeds primarily to fixed income and cash, Browning said. He also noted that valuation timing and appraisal-based assets (private equity, real estate) mute short-term movement in those allocations.
Board members discussed recent volatility and a rapid April snapback in market indices. "So far in April through yesterday, the S&P's up 6.8% month-to-date," one trustee observed; Browning and trustees cautioned that near-term reversals are common and that outlooks remain sensitive to conflict developments that affect commodity prices and global growth.
The board heard that private-equity benchmark selection has been updated (Cambridge Global Private Equity index used to improve apples-to-apples comparisons), that performance monitoring continues on a regular cadence, and that staff and consultants will follow up with the investment committee on manager-specific issues and benchmark alignment. No votes on policy changes were taken during the performance presentation.
