Dear Treasurer and Members of the Vestry:
The climate change resolution adopted by Convention delegates in November 2013 called upon the Trustees of Donations to explore the feasibility of offering a fossil fuel-free Stock Fund alternative to DIT participants. Following a nation-wide search carried out with the assistance of our investment consultants, Prime, Buchholz and Associates, Aperio Group was selected to provide a customized alternative called Diocesan Fossil Fuel Free Fund. It is being offered alongside our existing Stock Fund and excludes the same gambling, tobacco and coal mining companies that are already excluded from the Stock Fund. Additionally, however, this new fund screens out companies deriving more than 5% of their revenues from fossil fuel production and allocates 5% of its assets to companies that produce alternative energy, green building, energy efficiency, and pollution prevention technologies. This Stock Fund alternative is passively managed, with a portfolio optimized to track a custom 85% Russell 3000 / 15% EAFE equity benchmark, a benchmark selected by the Financial Advisory Committee of the Diocesan Council. Thanks to an $8 million dollar pledge by the Diocesan Council, an expression of its support for the 2013 climate change resolution and of its confidence in this alternative, the Diocesan Fossil Fuel Free Fund became available to DIT participants as an investment option in November 2015.
The 58**-basis-point annual fee for investments in the Diocesan Fossil Fuel Free Fund is lower by 22 basis points than the fee for investments in the existing Stock Fund, a reflection of the new fund’s passive management. Access to the Diocesan Fossil Fuel Free Fund will be more restrictive than access to the existing Stock Fund until it achieves an economy of scale. Unlike the existing Stock Fund, which allows for month-end withdrawals with one day’s advance notice, the Diocesan Fossil Fuel Free Fund allows investors to withdraw money only on a quarterly basis and on condition that they provide the Trustees of Donations with instructions no later than ten business days prior to quarter end. Standing instructions for quarterly distributions of fixed dollar amounts are accepted. The minimum for an initial investment in the fund is $50,000* and the minimum for additional investments is $20,000.
If, after reviewing the material below, your parish wishes to transfer existing Stock Fund assets into the Diocesan Fossil Fuel Free Fund, please mail a signed letter of instruction to our Investment Coordinator, Mr. Charlie Jordan, using the above address or scan and email it to email@example.com. New investments will, of course, be welcome.
Participants should keep in mind that the Diocesan Fossil Fuel Free Fund has been created to address a moral concern and that its returns will be affected (for better or worse) by the absence of investments in most of the Energy sector, a sector whose stocks comprise a large segment of the investable universe. In addition to our own Diocese’s decision to invest a portion of its assets in this new fund, you should also be aware that the National Church has voted to divest its endowment from fossil fuels. While as trustees, we are legally required to make recommendations based on investment merit alone (a constraint that prevents us from investing trust fund assets in this new fund), we are pleased to offer this Stock Fund alternative to agency fund participants who wish to direct a portion, or all, of their Stock Fund investments to it.
Thank you for your careful consideration of this offering and the material below. We look forward to hearing from you.
Jonathan Treat Elizabeth Westvold
Jonathan Treat Elizabeth Westvold
President Vice-President & Investment Committee Chair
*In May 2019, the minimum initial investment was reduced from $50,000 to $25,000.
**Effective January 1, 2021, the annual fees charged for the Diocesan Fossil Fuel Free Fund was reduced from 58 basis points to 47 basis points.
Fossil Fuel Free Fund Highlights
Customized Portfolio & Screening
- Passively managed by Aperio
- Proxy voting done in accordance with SRI policy
- Screens out companies deriving more than 5% of their revenues from fossil fuel free production
- Allocates 5% of its assets to companies that produce alternative energy, green building, energy efficiency, and pollution prevention technologies
- In addition to gambling and tobacco, the fund excludes fossil fuel producers within the following categories:
o Oil, Gas & Consumable Fuels*
o Coal Companies**
o Tar Sands****
o Carbon Underground 200™*****
See "Explanation of Fossil Fuel Divestment Options" section below for further details.
- Portfolio optimized to track a custom 85% Russell 3000 / 15% MSCI EAFE equity benchmark, a benchmark selected by the Financial Advisory Committee of Diocesan Council
- Benchmark includes companies within certain industries which have been screened out of the portfolio (e.g. fossil fuel producers, tobacco, gambling)
- Expenses for combined management, custody, accounting, and administrative services are 0.58% annually
Investing in the Fossil Fuel Free Fund
- The minimum for an initial contribution is $25,000 and the minimum for additional contributions is $20,000.
- Withdrawals can be made on a quarterly basis with 10 business days advance notice prior to quarter end.
aperio Firm Profile
Aperio's consultative approach is designed to bring clarity, experience, and comprehensive investment management through a disciplined yet flexible approach to indexing. They specialize in three practice areas: Active Tax Management, Factor Tilts, and Socially Responsible Indexing/ESG. With their depth of expertise, we design and manage portfolios that reflect a client's preferred risk profile and values while controlling tax costs and fees. Active Tax Management, Factor Tilts, and Socially Responsive Indexing can be used in complement or individually.
In August 2018, Golden Gate Capital, a leading private equity firm, acquired a majority equity interest stake in Aperio. Aperio continues to be led by its founders, Patrick Geddes, Chief Executive Officer and Chief Tax Economist, and Paul Solli, Chief Marketing and Strategy Officer.
aperioAssets Under Management – December 31, 2018
Total Assets Under Management: $24.7
aperio Leadership Team
Chief Executive Officer and Chief Tax Economist.
Prior to joining Aperio, Patrick was the Chief Financial
Officer of Morningstar, Inc. Patrick also served on the company's
executive committee, overseeing all strategic, policy, and internal
investment decisions. Prior to being named CFO, Patrick served as
Morningstar's Director of Quantitative Research. Before Morningstar,
he spent five years providing quantitative analysis, currency
hedging, and corporate tax optimization to Amoco, now part of BP, in the U.S. and
Europe. At Amoco, Patrick was part of a group
that modeled the nuances of highly complex international tax
structures as part of the company’s efforts to manage taxes as
effectively as possible, which in the energy sector can provide
enormous payoffs to the bottom line and shareholders. He has taught
numerous courses in graduate-level finance at the University of
California Berkeley Extension. Patrick received his MBA, with
Honors, from the University of Chicago. With Apeiro co-authors Lisa
Goldberg and Ran Lesham, Patrick was awarded a Harry M. Markowitz
Special Distinction Award by the Journal of Investment Management
for "Restoring Value to Minimum Variance" in 2014.
Paul O. Solli
Chief Marketing and Strategy Officer and head of product
development. He began his career as a CPA with Peat, Marwick,
Mitchell & Company in Boston and also worked in strategy consulting
for Bain & Company. Prior to Aperio, Paul was Vice President
of Salomon Brothers Investment Strategies group, responsible for
structuring portfolios and advising pension funds and investment
companies. While at Salomon Brothers, Paul also provided consulting
and order-execution services to the firm's largest indexers. He received his MBA from the Tuck School at Dartmouth
Lisa Goldberg is Aperio's Director of Research. She has a joint appointment in Statistics and Economics at the University of California, Berkeley, where she serves as Co-Director of the Consortium for Data Analytics in Risk (CDAR). Prior to joining Aperio, Lisa was an Executive Director of Research at MSCI where she oversaw research supporting pension funds, endowments, and sovereign wealth funds, with an emphasis on risk due to extreme events, asset allocation, and credit. She has held academic positions at City University of New York, the Institute for Advanced Study, l’Institut des Hautes Études Scientifiques, and the Mathematical Sciences Research Institute, and she was a Sloan Fellow from 1987 to 1990. Lisa holds a BA in Mathematics from Brandeis University. She serves on the editorial board of the Financial Analysts Journal, and she is an expert judge for the Haas Business School’s Moskowitz Prize for Socially Responsible Investing. She is the co-author of a book, Portfolio Risk Analysis, and more than 40 articles on mathematics and quantitative finance in peer-reviewed journals. Lisa, with co-authors Robert Anderson and Stephen Bianchi, was awarded a Graham and Dodd Scroll Award for Excellence by the Financial Analysts Journal for "Will My Risk Parity Strategy Outperform?" in 2012. With Aperio co-authors Ran Leshem and Patrick Geddes, Lisa was awarded a Harry M. Markowitz Special Distinction Award by the Journal of Investment Management for "Restoring Value to Minimum Variance" in 2014.
Chief Investment Officer, overseeing portfolio
management, portfolio accounting, and performance reporting. He has extensive expertise in applying quantitative
techniques and information technology to operational
problems, and is in charge of scaling the portfolio management
process and portfolio management research. Ran also works closely
with clients in a consultative capacity to create customized
solutions that best align with their investment objectives. Prior to joining Aperio, Ran was a
Operating Strategy at the GAP, Inc. He received his bachelor's degree in Mathematics from the
University of Waterloo, Canada, where he received the Hewlett
Packard Award for academic excellence, and his MBA from the
University of California,
Berkeley. With Aperio co-authors Lisa Goldberg and Patrick Geddes,
Ran was awarded a Harry M. Markowitz Distinction Award by the
Journal of Investment Management in 2016. Along with Lisa
Goldberg and Michael Branch, he wrote "Factoring Profitability,"
published in Risk-Based and Factor Investing in 2015.
Business Development & Client Experience
Ken Lassner, CFAis a Senior Client Relationship Manager. In that role, he oversees the firm's efforts in the Eastern US. He has over 20 years of experience in the financial services industry. Before joining Aperio, Ken worked at US Trust and Columbia Management as a Senior Product Specialist, focusing on providing tax efficient equity solutions to high-net-worth clients and wealth advisors. Prior to that, he was a Product Specialist for Deutsche Asset Management in the Advanced Research and Quantitative Strategies Group and an Investment Strategist at JP Morgan Investment Management, Inc. Ken also spent nine years as a plan sponsor for the Federal Reserve and the Interpublic Group of Companies, managing pension plan assets. Ken earned a BS in Finance from Babson College and an MBA in Finance and Investments from Bernard M. Baruch College. He holds the Chartered Financial Analyst (CFA) designation and is a member of the New York Society of Securities Analysts, serving as Vice Chair of its Sustainable Investment Committee. Ken also has a series 7 license (inactive).
Katie Salvaterrais a Operations and Client Service Manager at Aperio. In that capacity, she is responsible for managing client relationships, streamlining business development and client service processes and workflows, and identifying strategic business opportunities. Since joining Aperio in 2008, Katie served in various operations, client service, and senior management roles at the firm before assuming her current position. Previously, she was a Client Service Representative at Quantum Capital Management LLC. Katie received her BA from the State University of New York (SUNY) College at Brockport and an MBA in International Management from the Middlebury Institute of International Studies at Monterey.