Somerset Home for Temporarily Displaced Children
Jeffrey Fetzko, ACSW, LSW, CFRE
Vol. 4, No. 21, October 19, 2006
The Executive Director's News is published every two weeks, specifically for the employees of the Somerset Home. This issue and past issues are available on our web site at http://www.somersethome.org/main/pages/employee_newsletter.htm.
Whitney House Landscape Project Completed
The trees and bushes are planted and the grass is starting to grow. The past few months have been time well spent for our newest program. Whitney House is finally done, although we are never really done. The property looks terrific and the home is a true asset to the neighborhood.
Free Flu Shots for Somerset Home Employees
On Monday, October 23rd, between 4:30 PM and 6:00 PM at Passages we will once again be offering free flu shots for all Somerset Home employees.
Family members may also get flu shots for our cost of $25 (make checks payable to Somerset Home). Please let your supervisor know so we can get a rough count of how many to expect.
Pension Plan Changes
If you participate in the Somerset Home 401(k) plan you should have already received a notice to not move any investments or change deduction amounts while we close out the plan and get ready to transfer it to another plan administrator. Beginning no later than January 1, 2007 we will be switching from Paychex/Merrill Lynch to TR Paul/Condor Capital. We expect that our investments will perform much better by merging our 401(k) plan into the PSP plan that we currently hold with Condor Capital Management (see special pension plan notice below).
Please be sure to attend a special meeting on October 23rd at 5:30 PM at the Passages conference room where we will explain the benefits of the new Somerset Home Profit Sharing and 401(k) Plan. I will have our primary investment counsel from Condor Capital to explain the program and answer questions.
As always, if you have any questions about the pension program, please direct them to Barbara Kreutzer or directly to me.
Special Pension Plan Notice:
General Retirement Plan
Information
The Somerset Home Profit Sharing & 401k Plan is a qualified retirement
plan that is provided as a benefit to employees of Somerset Home. The profit
sharing portion of the plan is funded through discretionary employer contributions,
while the 401k portion of the plan is funded through discretionary employee
salary deferrals. Additionally, employer-matching contributions are made on
employee contributions to the 401k plan up to 3% of pay. Both plans have special
tax advantages that can make accounts grow larger and faster than conventional
savings: contributions are made with pre-tax dollars and, since these are
tax-deferred accounts, no income tax is paid until the money is withdrawn.
The plan's pension administrator can provide more detailed information on
the plan, including eligibility requirements, the employer match, loan provisions,
as well as other administrative items.
Historically, the Profit Sharing portion of the plan and the 401k portion of the plan were operated separately. The trustees decided to invest the Profit Sharing portion of the plan on behalf of the plan participants and hired Condor Capital, a fee-only registered investment advisor, to provide ongoing investment management services. The trustees decided to allow the participants to invest their own balances in the 401k portion of the plan using a predetermined selection of Merrill Lynch mutual funds.
Plan Changes
For a variety of reasons, the trustees have recently decided to consolidate
the Profit Sharing and 401k portions of the plan so that Condor Capital can
invest and manage the entire plan balance. Once the plans are consolidated,
participants will no longer have the ability to select their own 401k investments.
This decision is intended to benefit plan participants since it will result
in lower plan expenses for all participants and allow for both the Profit
Sharing and 401k portions of the plan to be professionally managed.
Your 401k contributions (if any) will no longer be directed to the Merrill Lynch accounts. Instead, they will be directed to the account being managed by Condor Capital. Additionally, your Merrill Lynch 401k account balance (if any) will soon be merged into the account being managed by Condor. In order to make sure all participant account balances are properly reconciled, all Merrill Lynch 401k accounts will be frozen from approximately October 16, 2006 through November 16, 2006, meaning no changes will be allowed to these accounts.
In the past, participants in the Profit Sharing Plan only received account statements one time per year, while 401k participants only had Internet access to their accounts. Once the Merrill Lynch 401k accounts are eliminated, participants will no longer receive electronic statements; however, all participants will receive semi-annual account statements on the combined Profit Sharing and 401k. Additionally, they will be informed of the plan’s performance through the company’s quarterly newsletter.
Condor's Investment Strategy
Condor Capital, founded in 1988 and located in Martinsville, NJ, manages nearly
$500 million of assets through a variety of investment strategies. The firm
also offers specialized services in the area of 401k and non-qualified deferred
compensation plans to corporate clients. Condor strives to balance growth,
income, and capital preservation in clients’ portfolios by maintaining
broadly diversified accounts with exposure to various areas of the global
equity and fixed income markets. The trustees of the plan have instructed
Condor to invest approximately 60% of plan assets in equities and 40% of plan
assets in fixed income instruments using a combination of mutual funds and
exchange traded funds.
Condor’s Mutual Fund Model – Mutual funds are excellent, low-cost investment vehicles that can provide broad diversification across multiple investment styles and asset classes. Condor’s team of financial analysts and portfolio managers seeks to construct customized mutual fund portfolios that deliver superior returns relative to the broader equity and fixed income markets. Specifically, the team seeks to mitigate risk exposure by investing in a basket of mutual funds with tenured managers, strong track records, and reasonable cost structures. Additionally, all fund candidates must have an established asset base and the highest ethical standards. Condor’s investment approach is a three-step procedure, whereby the team focuses in on prevalent macroeconomic trends and identifies the asset classes that are best positioned to take advantage of these trends. During portfolio construction, managers diversify assets among 15-20 pre-approved investments to reduce volatility. This also means using a combination of the best mutual funds from a number of different fund families that cover several different investment styles. Equity funds include some that have a “growth” bias, some with a “value” bias, and some that track a passive index, such as the S&P 500. Similarly for fixed income funds, Condor chooses mutual funds that invest in several different types of bonds, such as US Treasury bonds, investment-grade corporate bonds, and short-term bonds. Mutual funds are also employed to build exposure to niche areas of the equity and fixed income markets, such as small capitalization and international companies and high-yield bonds. The result of this process is a portfolio that offers stable growth, while minimizing long-term volatility. Approximately 75% of the aggregate portfolio will be dedicated to this strategy.
Condor’s Exchange Traded Fund (ETF) Model – Condor’s team of financial analysts and portfolio managers aims to construct an ETF portfolio that offers low-cost exposure to the broader market, with the potential for outperformance through tactical asset allocation. Investment decisions stem from Condor’s own in-house fundamental research, as well as outside sources. Condor has contracted with Ibbotson Associates, a leading authority on asset allocation strategies, for data and asset allocation weightings for its corporate services clients, which include several Fortune 1000 firms. Based on the data and forecasting resources from Ibbotson, in conjunction with research from Condor’s own analysts, the portfolio managers adjust the weightings of the representative ETF’s in each category. Typically, the adjustments will be limited to modest overweight and underweight positions. Overall, this strategy is intended to be passive, so rebalancing will occur quarterly. Note that ETF’s can be considered hybrids between stocks and mutual funds. They can be traded at any time during the day like a stock, but are baskets of stocks like a mutual fund. Since the basket of holdings inside each ETF tracks a specific index (broad or sector), internal expenses are rather low. Approximately 25% of the aggregate portfolio will be dedicated to this strategy.
8th Annual Run for Runaways
The 8th annual Run for Runaways will be here before we know it! We still need major sponsors, ad sponsors, and volunteers to help with our big event on November 4, 2006. Please contact Sharon Hall if you would like to serve on the committee or help with one of the many tasks involved in this exciting event. Check out the web site at http://www.runforrunaways.com for more details. Funds raised go to directly benefit our residents. I look forward to seeing you there!
If you haven't done so, please set up your personal fundraising page today. Click on the box or paste the url below into your browser to set up your page:
http://www.active.com/donations/campaign_public.cfm?key=8th_run_for_runaways
Setting up a fundraising page is an easy way to raise funds for Somerset Home programs.
As always, thank you all for your continued hard work on behalf of our youth.
