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About Smoke signals. (Grand Ronde, Or.) 19??-current | View Entire Issue (April 1, 1998)
April 1, 1998 News and Opinion 3 Grand Ronde Minors' Trust Letters Different investments for different ages A question frequently asked by members is, "Why did my two chil dren have different earnings on their Trust funds?" It is a valid question. The article below will explain the Investment Policy for the Minors' Trust Funds and, hopefully, shed some light on this question. Modern Portfolio Theory states that portfolio returns, over time, will be directly related to the amount of risk taken in the portfolio. Different in vestments (such as large company stocks, small company stocks, for eign stocks, real estate, bonds, etc.) have different levels of risk and dif ferent levels of return. Diversifica tion (mixing your investments) is therefore very important. This is pretty much common sense. Your grandmother told you not to put all your eggs in one basket. Trustees are instructed to consider both returns and appropriate risks when investing a portfolio. That is, not to just invest for the highest re turn possible but, to invest for the highest return with appropriate risk levels. They must consider what can happen in a market downturn as well as what the portfolio may earn. The single most important questions for Trustees in determining appropriate risk levels is time horizon. That is, how long will it be before the benefi ciary (minor) will receive the money? How long until the minor will be al lowed to withdraw their funds? The answer to this question, more than any other, will determine how much risk a minor's portfolio should carry. With longer time horizons, more risk can be taken and greater returns ex pected. With shorter time horizons, portfolio safety is a greater concern because there is less time to recover from a market downturn. Invest ments must therefore be more con servative and expected returns lower. In the Grand Ronde Minors' Trust, the Tribal Council, which is the Trustee, has divided the Tribal minors population into three different time horizons or risk tolerance groups. Ages 0-10, 11-16, and 17-20. The Council has hired Investment Consult ants, who use advanced computer modeling, to determine the appropri ate portfolio mix for each group. Ages 0-10 have a long time hori zon of 10-20 years before they will withdraw their funds. Therefore, they can tolerate a higher level of risk since they have time to overcome any market downturns. Their portfolio will contain a higher level of stocks and higher risk investments. Their portfolio can be expected to perform best in up markets and worse in down markets. Over time, it should show the highest returns because of the higher risk. Ages 11-16 have an intermediate time horizon of 5-10 year. They do not have as much time to make up for any market downturns before they withdraw their money. Because of this, they will have a lower risk level than 0-10, with fewer stocks and more bonds and interest bearing in vestments. They will therefore be expected to earn somewhat less than 0-10 in up markets and do better in down markets. While their earnings over time should be good, they should not be as high as the 0-10 group, who can take more risk. Ages 17-20 have a relatively short time horizon of 1-4 years before they may withdraw their funds. There fore, they cannot tolerate much risk in their portfolio. It would not be prudent to allow this account to drop substantially in a severe market cor rection. There is too little time to re cover before the minors withdraw their funds. The Council has there fore stipulated a low degree of risk with few stocks and mostly bonds. Because of this, the portfolio should perform at lower returns than the other portfolios in up markets and higher returns in down markets. For 1997, the portfolio performed as expected with the 0-10 portfolio yielding gross returns of 16.47, 11 16 portfolio yielding 13.85, and 17-20 portfolio yielding 9.36. As each minor grows older, they and their account balance will be au tomatically shifted to successively more conservative portfolios as they cross the age 11 and age 17 thresh olds. Getting the program kicked off, starting in October 1996, has been quite a chore for both tribal finance employees and consultants. Identi fying and locating all minors, getting their social security numbers and get ting them in the right accounts was a big job. With thousands of entries and transactions there were bound to be, and were, a few errors. Some minors were missed, or misidenti fied, or placed in the wrong group initially. Most of these hive now been straightened out with the help of parents and guardians. The fi nance department, personnel depart ment and consultants would like to thank affected parents and guardians for their assistance and their patience. The consultants report that, at this writing, all accounts are off to a strong start in 1998. To the Editor: I've been wanting to write to ex press both appreciation and concern. It has made me very proud to see how the Tribe has incorporated the surrounding community's "feelings" in its expansion, the community has been consulted and infrastructure built to negate any stress on commu nity resources.' I would imagine a lot of people are currently employed by the Tribe from the surrounding com munities. In all of nature there is contraction and expansion, and I am concerned that this rapid growth and hiring should be considered in light of the time of contraction. There would be resentment and ill will at loss of jobs, so I am hoping that all hiring is done carefully with a long term approach. Will the Tribe be able to support these employees in the lean times? The second issue is energy effi ciency and conservation. In all the details for the Casino and hotel and new Administration Building and even the shopping center, there has been no mention of the energy con science design that we as Native people must use. The wonderful gift of my heritage has always made me feel a special closeness and affinity with Mother Earth. Right now oil prices are low, en ergy in the Pacific Northwest is rela tively cheap and supply is plentiful. But, dams wear out, the next crisis in the Middle East or Indonesia could happen at any time, and excessive heating and cooling demands could be very costly. Drought happens, so are all the toilets and showers on low flow? Are there trees planted for natural cooling in the summer, and is the building oriented to catch light in the winter? Here in Hawaii, the economy is gloomy. The Asian fiscal crisis is affecting the tourist trade and the huge amount of employees on the city, county, and state payroll are being laid off the ones with jobs are being asked to take pay cuts. So the Tribe's continuing prosperity is of foremost concern to me, especially as I see here how poor fiscal plan ning can result in great hardship for people. Please take it slow and carefully, protecting the resources of Mother Earth and insuring the health, educa tion, and welfare of tribal members. Thanks to all of our leaders for their wisdom and foresight, so we can have prosperity now and in the fu ture. Judith Pettibone Honolulu, Hawaii Roll 717 Dear Editor: I am enclosing a letter to address my deepest concerns and embarrass ment of the last General Council meeting, on March 1, 1998. I am specifically referring to the abrupt closure of said meeting and from my observations, I feel it was an attempt to avoid discussions regarding the various issues and concerns that the tribal members wanted to address. It is my understanding that our Constitutional By-Laws defends our right for freedom of speech in our Council forum. By accepting your positions on Council, you agree to uphold these By-Laws and also agree to our Indian Bill of Rights. As the Tribal Council, you have a clear responsibility to listen to ALL THOSE WHO GO BEFORE YOU TO VOICE CONCERNS OR TO SIM PLY MAKE A STATEMENT. Asa Council you may not agree with what issues are raised, but you must give your full attention to each matter brought before you. You took these positions to represent tribal mem bers, and not self-interests. It is important today as ever before to have responsible leadership as well as one that is fair, honest, and acces sible to the democratic body it repre sents. ! As a concerned tribal member and one who cares very much about his people and the community, I would like to call for an apology from the entire Tribal Council to all the mem bers for the abrupt and insensitive closure of the last meeting. I would like this to go publicly in the Smoke Signals. I would also like to have a statement reassuring the tribal mem bers this action will never happen again in future Council meetings and that ALL THOSE WHO WISH TO SPEAK TO YOU WILL HAVE THAT CHANCE TO DO SO WITH OUT DISRESPECT OR OFFENSIVE BEHAVIOR. Respectfully, J. Ken Gregg Roll 1149 EDITOR'S NOTE: The March 1 General Council meet ing was adjourned after Tribal Coun cil, in accordance with the Tribal Constitution, called for a vote from the membership present. A motion was made by a Council member to adjourn and the motion was seconded from the floor. The meeting was ad journed after a majority show of hands from the membership.
