Investments: A Long-Term Perspective

If you’ve been paying attention to any sort of news these last few weeks, the turmoil around the world can be hard to take. The invasion of Ukraine, inflation at a 40-year high, continued commodity shortages, supply chain disruptions, gas prices, and the ongoing global pandemic – it’s overwhelming!

And if you read or watch business news, you’ve no doubt heard the statement, “the market doesn’t like uncertainty.” The events of the first few months of 2022 and resultant market volatility illustrate that assertion. For NCCF, long-term investment strategies are meant to withstand such short-term volatility.

Our investment objective seeks to preserve the fund principal over an indefinite time frame, while providing an average return that covers a 5% annual distribution, average 1% NCCF support fee, and inflation. This requires a moderate level of risk, a long-term investment horizon, and asset diversification. All of our long-term investment managers abide by the following asset allocation targets: 60% equity, 20% fixed income, 10% real assets, and 10% alternative investments.

While equities turned positive in March – global equities rose almost 3% and the broad U.S. market rose over 3% – global markets have resumed their retreat in April. The Fed started to raise interest rates in March to address the inflation problem, but investors are now concerned with more aggressive rate increases and the potential for economic recession.

Financial markets go up and down. While we can expect global events to create volatility in 2022, economic fundamentals, corporate earnings, and perhaps surprisingly, consumer spending currently remain strong. In difficult market times, I take great comfort in our long-term investment approach that has endured similarly volatile times and returned an average of 9.5% for the past 10 years.