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Fund Overview: Objective, Strategy and Holdings

The Social Values Choice Bond Fund (SVCBF) seeks to earn current income while preserving capital by primarily investing in a diversified mix of fixed-income instruments issued by entities that fulfill investor preferences for a heightened focus on corporate environmental and social performance. The fund invests primarily in fixed income securities such as U.S. and non-U.S. government bonds, agency bonds, corporate bonds and securitized products.

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

Management

SVCBF excludes specific companies subject to annual conference resolutions concerning peace in the Middle East. In addition, the Fund excludes companies that derive a significant amount of revenue from involvement in the fossil fuels industry. Both the Fiduciary Committee and UMC Principles Committee of Wespath's board of directors have approved these additional exclusions.

Like Wespath’s other funds, SVCBF 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.

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 Snapshot
Inception June 30, 2017
Exp. Ratio 0.47% for 2021
Benchmark Bloomberg U.S. Universal (ex mortgage-backed securities)
Fund Assets $112 Million as of February 28, 2023
Holdings December 31, 2022
Unit Price History Wespath Funds Price History
For More Information Investment Funds Description – P Series

Relative level of risk compared to other Wespath Funds

Graphic of relative level of risk compared to other Wespath Funds.

Performance, net of fees (as of 12/31/2022)

  3 mo YTD 1 yr 3 yr 5 yr 10 yr
Social Values Choice Bond Fund 1.70% -13.41% -13.41% -2.12% 0.50% -
SVCBF Benchmark 2.27% -13.34% -13.34% -2.34% 0.39% -

See Risk and Disclosures for more information regarding Net of Fees Performance.

SVCBF Benchmark

The Social Values Choice Bond Fund performance benchmark for is the Bloomberg Barclays U.S. Universal Ex MBS Index. The index consists of the U.S. Aggregate Bond Index, the U.S. High-Yield Corporate Index, the 144A Index, the Eurodollar Index and the Emerging Markets Index. Mortgage backed pass- through securities issued by Ginnie Mae, Fannie Mae and Freddie Mac are excluded from the index.


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].

Allocations

Holdings-Based Sector Allocations as of December 31, 2022

  SVCBF % SVCBF Benchmark % Difference %
U.S Treasuries 21.7% 45.3% -23.6%
U.S. Government -0.3% 1.3% -1.6%
U.S. Corporate 29.6% 24.7% +4.9%
Non-U.S. Government 0.5% 4.9% -4.4%
Non-U.S. Corporate 12.5% 8.8% +3.7%
High Yield 3.5% 5.5% -2.0%
Emerging Market Debt 5.2% 6.2% -1.0%
Mortgage-Backed Securities (MBS) 8.0% 0.0% +8.0%
Asset-Backed Securities (ABS) 4.8% 0.0% +4.8%
Commercial Mortgage-Backed Securities (CMBS) 0.2% 2.6% -2.4%
Term Loans 0.0% 0.0% 0.0%
Affordable Housing - Wespath PSP 0.0% 0.0% 0.0%
Collateralized Mortgage Obligations (CMO) 0.0% 0.0% 0.0%
Other 14.3% 0.7% +13.6%

 

Characteristics

Fund Characteristics as of December 31, 2022

  SVCBF SVCBF Benchmark
Effective Duration 5.75 6.01
Effective Convexity 0.30 0.73
Yield to Worst1 5.52 5.17
Effective Maturity 7.69 8.40
Average Quality A AA-

1 Does not reflect the deduction of fees.


Fund Distribution by Credit Quality as of December 31, 2022

  SVCBF SVCBF Benchmark
AAA 41.8% 51.5%
AA 5.4% 5.3%
A 18.0% 16.0%
BBB 24.3% 18.6%
BB 4.7% 4.4%
B 2.2% 3.2%
< B 3.6% 1.0%
NR 0.0% 0.0%
Cash 0.0% 0.0%

Risks & Disclosures

SVCBF is designed for investors who have a heightened focus on corporate environmental and social performance and seek a greater portion of their investment return from current income, rather than capital appreciation, but exhibit willingness to incur some market risk for the potential of modest capital appreciation.

All investments carry some degree of risk that will affect the value of SVCBF'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. SVCBF is subject to the following principal investment risks: credit risk, country risk, currency risk, derivatives risk, interest rate risk, investment style risk, liquidity risk, market risk, prepayment risk, security-specific risk and yield curve risk. Additionally, SVCBF is subject to modestly increased diversification risk, as compared to broad-market fixed income funds, because of the exclusion of a significant number of issuers from the investment universe (i.e., the exclusion of companies with fossil fuel reserves used for energy purposes).

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. 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

All expenses of the Fund are deducted from the Fund’s net asset value. The expenses include investment management fees, operating expenses, bank custodial fees and miscellaneous Fund administration expenses. These expenses are paid directly by SVCBF, and are reflected in the unit price calculated for the Fund. The unit price is multiplied by the number of units held in each client’s account to determine the total value of the client’s holdings in the Fund. For 2021, SVCBF’s expenses were 0.47% of the fund’s total assets.