Peguis First Nation Surrender Claim Trust – Portfolio Update


Peguis First Nation Surrender Claim Trust Portfolio Update @ April 30, 2020

The impacts of COVID-19 are being felt around the world with many countries taking drastic measures in hopes of limiting the spread of the virus. A serious global economic downturn has begun. However, governments have moved very quickly and aggressively to support individuals and companies. They have increased their spending and lowered interest rates. How long this crisis lasts and how the recovery plays out depends on when infections peak, possible breakthroughs in treatments or vaccines, and strategies to reopen the economy.

Bonds have Protected the Portfolio from Large Losses

Investment markets have been moving quite dramatically (both up and down) since early February 2020.  With news headlines in March reporting stock market declines of more than 30%, it is helpful to share how this market volatility has impacted the Peguis First Nation Surrender Claim Trust Portfolio. Yes, equity holdings in the portfolio have declined temporarily, but these are needed to continue providing growth. It is important to note, however, that the Trust has been very well protected by holding a large amount of secure fixed income investments that actually gained value in this period.  

Trust has Performed Well over Long Periods
Summary ending DECEMBER 31, 2019

*Inception of performance monitoring June 30 2012.
**Benchmark index is 67% FTSE Universe Bond, 18% MSCI World Equity, 10% S&P/TSX, 5% T-Bills 

As shown in the chart above, up to December 2019 the annualized return since inception for the Trust was 6.73%. It has gained $60.1 million, while also contributing over $29.6 million to the community during this time frame. Returns have exceeded the market performance in all periods to this date. 

Losses from COVID 19 Period Have Been Modest
Summary from DECEMBER 31, 2019 TO APRIL 30, 2020

As seen above, the Trust has declined in the first four months of 2020 year to date by approximately 0.6%. This $803,692 decline has not come close to the gain of $13,986,774 (+11.4%) that was earned even during the most recent calendar year. While there are no guarantees of future returns, the portfolio structure has well protected these assets. 

Investments Sometimes Go Down

Experiencing downturns and volatility never feels good, yet we must remember that investment markets rarely go up in a straight line without declines from time to time.  When markets drop, our first instinct may be to sell to protect our money – but history shows that is often the worst thing to do. In fact, by the time we’re feeling that urge to sell, it’s probably already too late to limit the damage. When markets inevitably recover, it can happen very quickly making it impossible to get back invested in time. When looking at previous market melt-downs, statistics show that stock markets have historically rebounded by about 30% in the next year. 

Sticking with the Prudent Investment Strategy

The Trust portfolio is well diversified by asset class and geography. Our prudent Investment Policy has been constructed to invest a target of 72% in fixed income securities and 28% in the more volatile equity markets. Our investment managers have been retained for their proven capabilities in all markets and the style diversification they offer. Through this crisis they remain vigilant, but also continue to seek opportunities to benefit the Trust. They remain focused on their disciplined investment philosophy and processes. 

We know that sticking with the Trust’s prudent, long term investment plan and avoiding speculation or panic is the best way to protect capital and grow wealth for the betterment of our community. 

As we continue to watch and monitor the markets, we keep the community and our future generations in mind.  May the Creator keep you and your family safe and healthy.


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