Online Discovery: Enhance Your CUs Investment Portfolio

From CUNA Mutual Group Public Relations

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Phil Tschudy 608/231-7188
Rick Uhlmann 608/231-8940

MADISON, Wis. – Credit union leaders at CUNA Mutual Group’s second annual, daylong Online Discovery Conference were told  to set aside personal investment biases and change their investment style to use all investment tools allowed by their credit unions’ charters and investment policies to build a solid investment portfolio.

Ed Meier, director and senior fixed income portfolio manager, MEMBERS Capital Advisors, and Jeremy Whitish, CFA senior analyst – investment risk, MEMBERS Capital Advisors, gave virtual conference attendees a history lesson to understand the change in investment strategy over the years.

“Many of us have personal investment biases that need to be justified in today’s economic environment,” Meier told conference attendees. “For example, in the early ‘90s many investors swore off investing in CMO’s (collaterized mortgage obligations). While that may have made sense at the time, it doesn’t today. CMO’s are typically underutilized,” Meier added.

Today, investors must consider all of their options and quantify their risks. “You have to ask yourself the question: ‘How does this optimize my credit union’s portfolio?’ If it doesn’t, then move on,” Meier told conference attendees.

This can be a challenge, especially with many investors having a conservative investment style, but the gain to the credit union’s bottom-line can be substantial. Meier and Whitish urged credit union leaders to consider their credit union’s funding needs, asset liability management (ALM) model output and economic outlook before ruling out a particular type of investment.

“Just because an executive investment manager doesn’t like a particular investment doesn’t mean it isn’t a good investment for the credit union,” Whitish stressed.

Credit union leaders need to think about their investment strategy differently today than they did 20 years ago. Most portfolios are excessively short in duration, Meier said. Credit unions must build in cornerstone securities, which have a potential for a higher yield and longer duration but maintain top-tier quality.

“It’s critical for investors to understand their credit union’s ALM model because if you don’t have loans on your books, then you must have investments that match or reach longer term than your liability stream,” Meier said. “We propose having a core group of cornerstone investments in your portfolio – no matter if it’s good times or bad times, rising rates or lower rates –  because it acts as a hedge that you can rely on despite the times or rates,” Meier added.

Credit unions should strive to have a balanced approach to investing. To achieve balance, Meier and Whitish advised credit union leaders to reduce their liquidity and invest in slightly longer term securities to protect against economic uncertainties and adopt a flexible investment style that limits personal investment biases.

“The best way to build a strong investment portfolio is to use all of the investment tools your credit union’s charter and investment policy allow,” Whitish said. “If you don’t, you will continue to struggle to build a solid investment portfolio for your credit union.”

Online Discovery is CUNA Mutual Group’s Web-based equivalent of a face-to-face conference without the associated expenses or time away from the office. The free, virtual event attracted a national and international audience of more than 1,800 credit union and league staff. The conference’s future-focused content aims to help credit unions solve problems, face challenges and address opportunities.

CUNA Mutual Group insurance, retirement and investment products provide financial security and protection to credit unions and their members worldwide. With more than 75 years of true market commitment, CUNA Mutual Group’s vision is unwavering: To be a trusted business partner who delivers service excellence through customer-focused products and market-driven insight. More information on the company is available on the company’s Web site at

CUNA Mutual Group is the marketing name of CUNA Mutual Insurance Society, its affiliates and subsidiaries, including CUMIS Insurance Society, Inc.  Product availability and features may vary by jurisdiction and are subject to actual policy language. Corporate headquarters are located in Madison, Wisconsin.

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