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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 nine 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 – P Series for a detailed description of the investment strategies used in managing the Fund.

Fund Performance 1,2,3, Net-of-Fees (as of 12/31/2023)

  3 mo YTD 1 yr 3 yr 5 yr 10 yr
Fixed Income Fund 6.70% 7.84% 7.84% -2.33% 2.16% 2.40%
FIF Benchmark 6.65% 6.51% 6.51% -3.00% 1.80% 2.29%

Universe Comparison

Fixed Income Fund vs. Peer Group Universe

Peer Group Performance Comparison

Peer group performance comparison

Annualized Performance (Net-of-Fees)

  1 Year 3 Year 5 Year 10 Year
Fixed Income Fund 7.8% -2.3% 2.2% 2.4%
Median 6.3% -3.3% 1.6% 1.9%
Rank (%) in Universe 5th 12th 18th 19th
# of Observations 329 303 281 182

 

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

Source: Lipper. Lipper Bond Funds Universe is a group of mutual funds comparable to FIF. Lipper utilized all mutual funds included in the pre-defined Lipper classification universe of "Core Plus Bond" to construct this Universe.


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, is computed in U.S. Dollars (USD) and reflects time‐weighted returns. 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 Fund may vary substantially from those in the applicable benchmark. 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. The bar chart and tables were produced using data from sources believed to be accurate. The bar chart and tables assume reinvestment of dividends, interest and other distributions. This information is for informational purposes only and is not an offer to purchase securities.

2 Please refer to the Investment Funds Description – P Series for more information about the Fund. The investment funds are neither insured nor guaranteed by the government.

3 Benchmark descriptions can be found here.

Allocations

Holdings-Based Sector Allocations as of December 31, 2023
Sector FIF Actual (%) FIF Benchmark (%) Difference (%)
U.S. Treasuries 18.4% 46.1% -27.7%
U.S. Government* -3.2% 1.0% -4.2%
U.S. Corporate 22.7% 25.3% -2.6%
Non-U.S. Government 6.4% 4.8% +1.6%
Non-U.S. Corporate 5.6% 8.8% -3.2%
High Yield 8.7% 5.3% +3.4%
Emerging Market Debt 10.0% 5.6% +4.4%
Mortgage-Backed Securities 6.3% 0.0% +6.3%
Asset-Backed Securities 1.7% 0.0% +1.7%
Commercial Mortgage-Backed Securities 10.9% 2.4% +8.5%
Term Loans 1.5% 0.0% +1.5%
Affordable Housing-Wespath 2.9% 0.0% +2.9%
Collateralized Mortgage Obligations 0.0% 0.0% 0.0%
Other** 9.0% 0.5% +8.5%

* 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.

** Other includes alternatives and cash.

Allocations are preliminary and subject to change.

Characteristics

Characteristics as of December 31, 2023
  FIF FIF Benchmark
Effective Duration 5.45 6.02
Effective Convexity 0.39 0.75
Yield to Worst* 5.41% 4.85%
Effective Maturity 7.73 8.56

Does not reflect the deduction of fees.


Distribution by Credit Rating as of December 31, 2023
  FIF FIF Benchmark
AAA 7.1% 4.8%
AA 36.4% 52.4%
A 12.7% 16.6%
BBB 22.7% 18.1%
BB 8.9% 3.8%
B 6.5% 3.2%
< B 2.3% 1.1%
NR 2.5% 0.0%
Cash 0.9% 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

The performance shown is for the stated time period only and computed in U.S. Dollars (USD). 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 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 the Investment Funds Description – P 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 Benefits and Investments, and for non-Fund related activities and operations.

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 Wespath to administer each P 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 – P Series.