Ka Wai Ola - Office of Hawaiian Affairs, Volume 12, Number 9, 1 Kepakemapa 1995 — OHA's Native Hawaiian trust fund [ARTICLE+ILLUSTRATION]

OHA's Native Hawaiian trust fund

by Abraham Aiona Vice-chairman and Trustee, Maui This past fiscal year the Native Hawaiian Trust Fund reaped the rewards of a sound, long-term investment policy. For fiscal year 1995 (July 1, 1994 to June 30, 1995) the Fund's assets

grew to $193,300.000, with investment gains adding more than $29,000,000 to the fund. If you will recall, during 1994 stock and bond retums were a disappointment to all investors. In weak markets the temptation is always there to make ill-advised, short-sighted shifts in strategy at the end of such a year, especially when it seems returns will eonhnue to go down for stocks and bonds inlo the next year. However, the OHA Board of Trustees is committeed to a long term investment strategy. Part of that strategy is to review investment manager performance periodi-

cally to insure that investment policy is being adhered to. After reviewing OHA's 1994 investment returns, and meeting with its investment managers, the Committee on Budget, Finance and Policy continued on the course that was estab-

Ushed in October of 1993. This long term approach has been in practice in the financial markets for several decades and is used by successful funds all over the world. It has been studied and is widely accepted that in most cases, quality investment managers will eominue to produce high investment returns over the long run. They should be monitored and be required to meet

with the committee periodically, but short term underperformance does not warrant dismissal of an investment manager. The approach and philosophy that drives a successful investment program is veiy similar to the methods and techniques used for generations by Hawaiians to harvest the weakh of the oeean. It is a system that is based on diversification and the use of expert knowledge gained over a long period of time. The fishennen, experienced in the gathering of fish, decide the type of fishing that will produee the best yield. There are experts in diverse

fishing techniques. They make their decisions based on knowledge and tradition passed down for generations. Some know about the tides, currents and winds. Some know when a certain species of fish is "running" and when they are spawning. Some also know how to ku'i 'opihi and harvest limu. But all fisher-

men also know that there are no guarantees. The weather, the wrong current, or a kapu ean mean that there will be no fish. Therefore they dry some of their catch, or raise pigs, to plan ahead for the inevitable. Mueh the same is true with investing. OHA selected investment managers to carry out a specific role (investment style) in the Fund. Their past records were screened, and they were ehosen based on outstanding performance in a given style of investing. During certain market conditions, some managers will do better than others because that style of investing will do well at that time. Given different conditions further down the road, their fortunes may reverse. Over the long run, the diversity of the Fund has a balancing effect similar to the fishing example. All the fundamental areas of investing are covered with this strategy so the Fund ean weather the bad times as well as ride the good times. The stated goaI of the Native Hawaiian Trust Fund 'is to achieve superior

investment returns over the long term whieh will provide funds to be used to sustain the beneficiaries. Our investment policy is designed to achieve this goal.

There is no Board Busin6ss report this month because the business meeting of the board scheduled July 27 was postponed to Aug. 24, after this issue of Ka Wai Ola O OHA was printed. Next month's issue will include that meeting report.