4.2. SR 07-26-1993 - Laserfiche WebLink

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e ".,......... ~ Did you know? Stan Peskar Investment of firefighters' relief association funds Do city clerks, administrators, or managers and councils need to con- cern themselves about the invest- ment of "special funds" of volunteer firefighters' relief asso- ciations? Yes. The relief association trustees, including the city clerk or clerk-treas- urer, mayor, and fire chief, have a fiduciary obligation to see to it that association investments are prudent.l ~Additiona1lY' the city and its taxpayers, as well as the association members, could face financial losses if trustees don't handle investments carefully. Volunteer fire relief associations have a wider range of investment options than cities do.2 The range of permitted investments for relief asso- ciations is quite broad, and includes a number of equity-type investments such as corporate stocks, mutual funds, limited partnerships in venture capital investment business, and real-estate limited partnerships. The statute pur- ports to authorize use of put-and-call options as well as futures contracts on various securities, all of which might be regarded as purely speculative unless used for hedging purposes. Examination of market data seems to indicate that over extended periods, equity and other alternative invest- ments may produce a better overall return than fixed-income securities like certificates of deposit or U.S. govern- ment securities. But expectations of &;reat:r };elds assume adequate diver- sification and otherwise competent and professional investments. An unfortun- ate. plunge with a large portion of available assets can reduce the principal so drastically that it is difficult to recover, even with excellent subse- quent returns. . . Therefore, direct investment in equ- Ities and other volatile securities may not. be wise for most volunteer fire re.he~ associations. Conservation of ~nnClpal has to be a prime considera- bon when deciding on investments for any pension fund. The relief association needs to con- November 1986 sider several factors in investments. The first and most obvious question is whether it's appropriate to make investments which place the principal at risk. Recent experience with long- term, fixed-return instruments like bonds demonstrates that in times of rising interest rates, market value can decline dramatically. Thus, unless maturities are timed so that it's not necessary to sell investments to pay ongoing obligations, some principal can be lost, even in fixed-return invest- ments. Exact timing of maturities to all The law firm of O'Connor I & Hannan is pleased to <lnnounce that RANDOIPfIJ. MAYER has joined the firm's Munifipal Finance Department resident in the ~inneapo1is office Mr. Mayer returns to O'Cornior & Hannan after five years with the Willkie Farr &t Gallagher law .firm in New York City where he ~rved as bond counsel and underwriter's counsel fot the issuance of general obligation bonds and indust:r4u development bonds. Prior to joining Willkie Farr, he ~d been with O'Connor & Hannan for !two years. i Mr. Mayer joins W41iam R McGrann, Andrew). Shea, William E.I Flynn,]ames P. O'Meara, Thomas D. Creighton, Nic,\<: Hay,]ule M. Hannaford, Mark). Ayotte and Deb~ G. Strehlow in serving over 100 municip~ clients at O&H. O'CONNOR So HANNAN QaH 3800 IDS CENTER. 80 SqUTH EIGHTH STREET MINNEAPOLIS. MN 55402-?254 16121343-1200 WASHINGTON. D.C. DENVER MADRID 31