"Because the Earth is God’s Garden”
In 2015, the Connecticut Conference launched the Eden Fund for congregations that are concerned about environmental impact. The Eden Fund excludes Fossil Fuel Reserves from all equity holdings.
Download the latest brochure June 30, 2021
EDEN FUND CELEBRATES FIVE YEARS - March 2021 update
The Eden Fund was launched in the fourth quarter of 2015 in response to concerns about the environmental impact of fossil fuel consumption. The Eden Fund shares the same investment objective as the Total Return Fund and excludes the same companies profiting from alcohol, tobacco, gambling and defense weapons. In addition, the Eden Fund excludes any company holding fossil fuel reserves from its portfolio and largely relies on investment managers using “green” approaches to security selection.
Some expressed skepticism about this approach. Advocates argued that the approach would not increase risk, that sustainable business strategies would prove profitable, and that fossil fuel reserves were overvalued. Results over the past five years have largely validated these arguments.
Performance has been more than satisfactory. The average annual rate of return for the Eden Fund over the past five years ending 12/31/20 has been 9.54%, net of all expenses, compared to 8.61% for the Total Return Fund. Risk metrics indicate that the Eden Fund is comparable or lower risk than the Total Return Fund. Eden Fund performance has trailed its benchmark by an amount comparable to expenses, as might be expected for a portfolio employing passive investment strategies for almost 60% of assets. Past performance is no guarantee of future results.
Participant interest in the Eden Fund is growing rapidly. In the first quarter of 2021, transfer of assets from the Total Return Fund the Eden Fund will amount to approximately $18 million, increasing Eden Fund assets by more than 60%.
Fossil Fuel Free
The Eden Fund’s strategy for equities goes beyond Socially Responsible Investing exclusions (alcohol, tobacco, gambling, weapons) to exclude Fossil Fuels. Working with Parametric Portfolio Associates, LLC, we exclude companies with evidence of owning fossil fuel reserves regardless of their industries, including companies that own greater than 50% of a reserves field, regardless of revenue derived. Fossil Fuel Reserves are defined as proved and probable reserves for coal and proved reserves for oil and natural gas. Evidence of owning reserves includes companies providing the exact volume of reserves, and companies making a statement about their ownership of reserves. Data is provided by MSCI. This is a more rigorous screening than the 100 largest coal companies and 100 largest oil and gas companies that are often used to create Fossil Free portfolios.
Effective in July of 2021, the fossil fuel exclusion was expanded to exclude companies deriving more than 50% of revenue from activities related to oil, gas, or thermal coal, and companies generating more than 50% of power from fossil fuels.
The Eden Fund employs a similar strategy for fixed income securities as well.
Positive Environmental Impact
Eden Fund participants are divesting from virtually all of the companies holding fossil fuel reserves, generating more than 50% of revenue from fossil fuels, or relying primarily on fossil fuels o generate power.
We will continue to evaluate additional screens or stock selection criteria to increase the positive environmental impact of investing in this fund.
Diversification is the cornerstone of prudent investing. Any exclusion strategy reduces diversification, which increases risk. However, our partner uses proprietary strategies to limit tracking error compared to broad market indices. This is a "passive" investment approach, seeking to match the performance of broad market indices.
The overall goal of each Consolidated Trust Fund is to maintain the inflation-adjusted market value of assets, while providing a relatively predictable, growing stream of revenue.
The objective, therefore, is to earn a total return (net of all fees and expenses) equal to or exceeding the CTUCC’s targeted spending rate, currently 4.5%, plus the inflation rate - as measured by the CPI.
Balanced, Diversified, High Quality Portfolio
Investments are diversified across asset classes, industry sectors, individual companies, and duration of fixed income securities.
In order to meet the investment objective, asset allocation is biased towards equities and other asset classes with equity-like returns. Fixed income securities and other asset classes are used to reduce volatility and hedge investment risks.
Oversight – Investment Committee
The Investment Committee is made up of skilled, experienced volunteers who are members of Connecticut Conference churches.
The Investment Committee meets quarterly to review performance, asset allocation, and other matters.
The CTF Investment Committee has assembled a highly qualified team of companies to work with us to meet our objectives. Our investment consultant is Fiducient Advisors. Our administrator is Apex Fund Services. Our custodian is US Bank.
There are no fees associated with purchases or redemptions in the fund.
Total expenses of the fund, including management, transaction, custodial fees, and fund accounting fees should be approximately 45 basis points (0.45% of invested assets)on an annual basis.
There are always risks associated with investing.
There is no guarantee that the Eden Fund will perform as well as, or better than, the Total Return Fund.
CT Investment Committee Disclaimer
The Committee does not endorse the adoption of fossil fuel reserve free strategies, as it is a fiduciary principle to avoid unnecessary risk, even if the risk is modest. The Eden Fund is offered as a option for those congregations that believe that moral considerations should also factor into investment decisions.
Congregations can choose whether and how much to invest in the Eden Fund, but continue to have the option of investing in the Total Return Fund.
The Missionary Society of Connecticut has allocated endowments to the Eden Fund..