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Stability of the SOT’s Resources during Turbulent Times
Submitted by William Slikker, Jr., SOT Treasurer
All are aware of the difficult economic conditions as described by some as "the worst financial crisis since the Great Depression." Many banks, financial institutions, corporations, and individuals have been affected. So, how is the SOT faring during these uncertain times? As a 501(c)3, not-for-profit organization, SOT holds it resources in a diversified portfolio of investment, money market, and savings accounts that are managed by Merrill Lynch as directed by SOT established policies. During the last several years while the markets were expanding, SOT benefited appreciably from this growth. And now that the markets are contracting (S & P 500: -18% from January to October 2008), SOT’s resources have also contracted (-6%), but have outperformed the market’s key indexes. During the next several months, it is anticipated that the markets will remain volatile and members of the SOT Finance Committee will continue to actively monitor SOT’s relatively conservative and diversified portfolio.
Two recent events have altered the way SOT interacts with Merrill Lynch. To reduce management costs, SOT Council, as recommended by the Finance Committee, has approved that selected investments will be automatically indexed to benchmarks rather than managed by individual account managers. The second change, although without direct effect on SOT, is that Merrill Lynch was recently purchased by Bank of America. Since our portfolio manager has not changed and the Bank of American acquisition of Merrill Lynch has reportedly strengthened the investment firm, this is considered a good thing for SOT.
As we all look forward to greater stability in the financial markets and a return to those years of sustained growth, it is good to know that the diversified portfolio of SOT’s assets is stable and performing better than the markets at large.
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