THE investment arm of the Anglican Church's Sydney diocese posted a $160 million loss for the year ending December 2008 after its highly geared share portfolio crashed amid the global downturn.
Sydney Morning Herald - 16th Oct 2009 - Vanda Carson
THE investment arm of the Anglican Church's Sydney diocese posted a $160 million loss for the year ending December 2008 after its highly geared share portfolio crashed amid the global downturn.
The scale of the loss was accentuated by the fact its investment body, the Glebe Administration Board, chose to put most of its money with one fund manager.The chief executive of the board, Steve McKerihan, said board members chose to invest more than three-quarters of its $388 million of "growth assets" with index funds held by Barclays Global Investors.The remainder was invested in listed real estate investment trusts through Vanguard, with a small amount in unlisted property trusts.Mr McKerihan, a former chief financial officer at St George Bank, conceded it was unusual to put 80 per cent of the "growth assets" with one fund manager and agreed that many rival wealth managers chose to divide funds between several managers to spread the risk.The Glebe board blamed the size of the loss on its use of gearing.Mr McKerihan said the decision to borrow up to $150 million from ANZ and Westpac to invest had been made by the board in 2002 and was based on "external advice". He declined to say who gave the advice, saying the board took "collective responsibility" for choosing the high-risk gearing strategy in 2002.It delivered high returns until the end of 2007, but triggered the massive losses which wiped out surpluses made over four years.Most of the current board was in place in 2002. However, five members had recently offered to resign.Mr McKerihan did not join the company until July 2007.The $160 million loss included a $123 million loss on its share portfolio after it decided to cash out $100 million of "growth assets" at the bottom of the market in November last year.Mr McKerihan said he was "not aware" if any soft dollar commissions, such as computer systems, had been paid by Barclays to the board in return for the hefty investment with the fund manager.In December 2007, six months after Mr McKerihan joined, the board had $244 million invested in a Barclays Global Investors index fund made up of a spread of Australian equities, complete with an "ethical screen" to block "sin stocks", including gambling and tobacco. This investment was now worth just $44 million.The board's investment manager, David Cannings, was made redundant in July after six years with the church's investment arm.Elizabeth KnightPage 8
