Community Trust Investment

History and Background

The MNCFN Community Trust was created with payment of $12.7 million in settlement funds paid to the Mississaugas of the New Credit First Nation by the Government of Canada on April 4, 1997.  The $12.7 million or Capital Funds, as it is referred to in the Trust Agreement must be invested within investment vehicles as defined by Section 2 (m) of the Trust Agreement.

Note: The original Trust Agreement mandated that the Community Trustees pay out $700,000 of the original Capital Funds ($12.7 million), the Chief and Council.  The $700,000 was to be paid upon the original receipt of the settlement funds.  The Community Trustees processed this transaction on July 24, 1998 when $734,654.79 was paid to the Mississaugas of the New Credit First Nation.  This transfer amount satisfies Section 12.2 and 12.3 of the Trust Agreement.


-Section 12.2 provides $200,000.00 to the Council to purchase 200 acres of land to be added to the reserve base.

-Section 12.3 provides $500,000.00 to the Council for Economic Development activities.

-The sum of $34,654.79 represents the interest earned on the funds from April 10, 1997 to July 24, 1998.  Trustees passed a motion to transfer the interest amount so that the Council would have the benefit of the funds, as if they were transferred at the April 10th date.

 Section 2(m) defines the “Permitted Investments” as such;

i) Publicly traded Canadian and non-Canadian common stocks and convertible debentures;
ii) Bonds, debentures, notes or other debt instruments of Canadian and non-Canadian governments;
iii) Mortgages secured upon real property;
iv) Private placements, or debt or equity, of Canadian agencies or corporations;
v) Guaranteed Investment Contracts or equivalent;
vi) Mutual or pooled funds of the above listed Permitted Investments;
vii) Without limitation by subparagraphs (i) through (vi), any investment in any Band Company, or development, or project recommended by Council which is deemed by the Trustees to provide sufficient guarantee and level of return to the Trust, so as not to abrogate from duties, responsibilities, and authority of the Trustees, as herein contained.

The Capital Funds are invested with Investment Management firms that are registered with the Ontario Securities Commission as Investment Counsel and Portfolio Manager.  This designation by the OSC ensures that our community funds are managed by firms that are legally responsible to provide the Community Trustees with a fiduciary duty to make decisions that are in our best interest and that meet our needs and goals.  Generally, First Nation Trustees do not have a formal background and training in the area of financial investing.  It is the responsibility of the Trustees to hire professionals that have this training and designations.

The Role of the Investment Manager is to invest the Community Trust’s Capital Fund within the guidelines of the “Investment Policy Statement” that is provided by the Community Trustees.  The Investment Policy Statement is the document that provides the parameters of the authority the Investment Manager has with regard to the MNCFN Community Trust money.  On a quarterly basis the investment managers report to the Community Trustees as to how our funds are progressing and the allocation of the assets are broken down.

Originally, the Capital Funds were invested with TAL/CIBC Private Wealth Management.  Since 2008, Lincluden Asset Management and Ridgewood Capital Asset Management are the investment management firms responsible for the MNCFN Community Trust's invested funds.

Investment Managers

In 2008, the MNCFN Community Trustees became unsatisfied with the investment performance and service of the Investment Manager that had been retained by the Community Trust since 1997.  The Community Trustees embarked on an Investment Manager search with the advice from Rodgers Investment Consulting.  The Community Trustees formalized a list of appropriate Investment Managers that were qualified to provide service to a Trust such as ours.  Once the list was completed, the Community Trustees “Mystery Shopped” prospective Managers at the 2008 Aboriginal Trust and Investment Workshop.
 
The list was narrowed down to six firms that were invited provide presentations to the Community Trust.  Throughout this process, MNCFN Chief Bryan LaForme and Council were invited to sit in and observe, at times participate in this process, as they were heading into final negotiations for the Toronto Purchase Claim.  The Community Trustees felt that it was important to share the knowledge of this industry and provide the Chief and Council with the opportunity to familiarize themselves with this process.

The six firms presented and the Community Trustees selected, Lincluden Asset Management and Ridgewood Capital Asset Management.  The Community Trustees decided that the Capital Investment Funds should be split equally to Lincluden and Ridgewood to offset the investment risk called Market Risk.  There are two basic styles of investing, Value and Growth. 

In 2019, the Trustees reviewed the performance of our Investment Managers and determined to replace Ridgewood with Letko Brosseau and Associates.  Our Investment team today is Lincluden Asset Management and Letko Brosseau and Associates.

 


Value investing is explained as follows; (from Investopedia.com)

"The general idea behind value investing is that, for any of several reasons, a stock may be trading at a price that is far below its intrinsic value. By purchasing the stock at its current price, an investor believes that eventually the market will recognize the company’s value and bid the stock up to reflect its intrinsic value.
What exactly is intrinsic value? The simplest explanation is that it is the value of a business’ ongoing operations. In other words, how much cash will the company generate in the coming years, and what is that cash generation value worth in today’s dollars?"


Growth investing is explained as follows; (from Investopedia.com)

"A strategy whereby an investor seeks out stocks with what they deem good growth potential. In most cases a growth stock is defined as a company whose earnings are expected to grow at an above-average rate compared to its industry or the overall market."

Market Risk can be explained by noting that each year, Value or Growth Style may be the way the Investment Market develops that particular year.  If the year develops as a Value year, the investment managers that use the Value approach will tend to perform better than those who use the Growth style.  The same holds for years that favour the Growth style, the Growth manager would perform better.  The ensure that we always have a good year, an investor can utilize both style managers, in the case of the Community Trust we decided that diversifying or not “holding all of our eggs in one basket”, the decision was made to hire a two different managers to ensure we have success every year, based on style. 

Lincluden and Ridgewood were the best performing managers based on a Request for Proposals (RFP) that contained an extensive number of questions, including firm composition, mandates under management, mandates gained/lost in last 5 years as well as the important, performance data, followed by an intense interview.   

MNCFN Community Trust Investment Annual Valuations

(Values are as of December 31th and are provided on a Market Value basis from the Investment Manager Statements)

1997  $12,544,838.00

1998  $13,937,513.00

1999  $14,412,016.00

2000  $14,914,771.00

2001  $14,620,599.00

2002  $13,282,996.00

2003  $13,543,857.00

2004  $14,363,404.00

2005  $15,091,104.00

2006  $16,680,263.00

2007  $16,127,436.00

2008  $13,797,798.00

2009  $15,313,725.00

2010  $15,936,320.00

2011  $15,087,840.00

2012  $16,316,044.00

2013  $18,785,112.00

2014  $20,379,040.00

2015  $21,418,837.00

2016  $22,898,000.00

2017  $23,120,276.00

2018  $22,151,678.00

2019  $23,982,537.00

2020  $23,870,711.00

2021  $27,225,308.00