Green Square Capital, the investment firm in charge of the county’s portion of the hospital trust fund sale, gave a report to the Lafayette County Board of Supervisors Monday indicating the trust is making money, even in a volatile market.

The investment balance at the end of 2015 was $19,624,331 with the total distribution to the county standing at $1,117,283 for a total economic value with distribution of $20,741,614.

The county evenly split the just over $60 million in proceeds from the sale of Baptist Memorial Hospital with the city of Oxford and invested $20 million of their portion in April 2013 after paying off $10 million in debt. So basically, the county has made just over $740,000 since that time.

“We’re pleased overall with the performance,” board president Jeff Busby said. “Right now the market is so volatile. But this is not something we were trying to get rich quick off of. We are investing it very conservatively for the future of this county and for all of our children. It’s not a quick fix. We’re in it for the long haul and we still have confidence in the Green Square group. They can’t control what the market is doing right now. It’s just so volatile. We’re invested in great stocks, bonds and moving forward I think we’ll see a turn around. I hope.”

Rising interest rates

Busby asked the Green Square representatives how the trust would be affected if interest rates continue to go up.

Their solution is the bond allocation will be intermediate or shorter than intermediate so there will be short-term bonds. For example, Green Square has a portfolio of corporate bonds coming due soon so the county will be on the short end of bond maturities. That will allow a constant flow of bond maturities to reinvest at higher interest rates. They also believe interest rates will move up a lot slower.

“Our plan is to look at opportunities when the markets are moving around to re-balance,” said Green Square representative Steve Sansom. “Number two, stay with high-quality assets. Number three, reduce our equity exposure to 40 percent and then evaluate whether to drop it lower than that. And number four, keep our bond maturities to the intermediate or short area as it relates to the rising interest rate environment and be cautious about how we position our maturities. We are extremely focused and look at this portfolio to make sure it is positioned correctly and to think about how and when to reduce some of our exposure to the volatile market.”

They have an extensive review of the portfolio on a monthly basis to see how it is performing.

“I’ve been in this business for 25 years and through three very volatile periods and this one is a doozy,” said Sansom.

To indicate how flat the market was in 2015, Green Square said that if you take out Facebook, Amazon, Netflix and Google stocks in the S&P 500 in 2015, the market would have been down for the year.

“Value of stocks underperformed the growth of stocks last year,” said Sansom.