Change of Investment Policy for Replacement Fund (aka “Reserves”)

By Mike Nilsson, Member
and Bill Wethe, Chair
Finance Advisory Committee

Through December 2020 our Replacement Fund, per the existing Policy, was invested in cash based and fixed income assets. As we all know these investments are earning very low rates, far below construction cost inflation. In December 2020 the Board approved a change in the Investment Policy whereby up to 35% of the Replacement Fund could be invested in a professionally managed basket of low-cost equity investments. In April 2021 the Board approved moving $3 million (about 25% of the Fund) into equities. Almost $1 million was invested prior to July and the balance is to be invested over the remainder of this year. The “basket” is being managed by Comerica Securities and closely monitored by the FAC. The investments are in index funds, mutual funds and exchange traded funds.

To view a copy of the current Investment Policy use the following link on the HOA website: