Curtis D. Sharp
Executive Officer for Denominational and Public Relations
214-720-2127
Curt.Sharp@GuideStone.orgResponding to volatile markets
January 27, 2009
DALLAS—During the last year, worldwide financial markets have experienced a season of volatility that the world has not seen in a generation. The extreme market volatility has caused many investors to re-evaluate their risk tolerance.
GuideStone Financial Resources President O. S. Hawkins provided perspective on how investors should respond during such difficult times, “GuideStone has always encouraged retirement investors to be well diversified and appropriately allocated. It is important for participants to evaluate their current asset allocation based on their long-term goals and objectives.”
GuideStone provides assistance for investors who may want to consider another look at their risk tolerance through the Investor Profile Quiz (pdf).
All investors are feeling the effects of the volatile financial markets we’ve witnessed over the past year. Investing for the long term brings with it unavoidable ups and downs along the way. Through its manager-of-managers approach to building its investment funds, GuideStone is able to access the talents of world-class investment management firms and has avoided the pitfalls of hedge funds such as those reported in the recent Madoff scandal.
“GuideStone, like other Southern Baptist entities and churches, has evaluated its projected expenses in light of its budget and has made decisions to reduce its 2009 budget by aggressively managing costs,” Hawkins said.
In a recent internal memo to employees, GuideStone announced reductions for the organization’s 2009 budget. Hawkins explained the reason for the reductions to the budget.
“The downturn in the global economy and the subsequent reduced value of securities in our investment funds has impacted the fee revenue that funds our budget,” Hawkins said.
Unlike the mission boards and seminaries, GuideStone receives no Cooperative Program funds from the Southern Baptist Convention. It relies solely on the fee revenue from its proprietary investment funds to provide the resources to fund the majority of its operating expenses. Expenses related to its life and health products are funded through the premiums paid by organizations whose participants are in those plans.
Over a decade ago, and in recognition that financial markets are cyclical, GuideStone trustees established an operating reserve that would provide additional resources for times such as these. Hawkins said, “This reserve enables us to maintain our service levels to our participants in times when the markets are down. We must use it prudently in order to extend its ability to offset our anticipated revenue shortfall.”
During the budget preparations for 2009, trustees and staff carefully examined each cost center’s anticipated expenses. Important decisions were made to aggressively manage expenses and cut costs. Subsequent to the budget process and in response to the persistent tumultuous market conditions, GuideStone took further actions to reduce its 2009 budget by implementing a hiring freeze and a salary freeze for all employees. By not filling open positions and through anticipated attrition in 2009, GuideStone projects to reduce its workforce by approximately ten percent.
Many financial market experts believe that the recovery from the global recession will be slow.
“While we do not know if the recovery will be six months, a year or even longer, we must seek to be wise and plan accordingly,” Hawkins said.
Through a recent strategic planning session, additional potential areas of savings were explored and decisions were made to further reduce operating expenses. Most of these reductions related to delaying some purchases such as additional computer equipment, reducing travel, delaying some professional development and reducing the amount of printed materials by providing more materials on GuideStone’s Web site.
Hawkins explained that additional action may be required should the financial markets deteriorate further, “While we are hopeful about the future, further deterioration in the financial markets or a significantly prolonged recovery from the current recession may require other measures to further reduce future costs.”
“Continued monitoring of the budget and additional strategic planning is a priority as we move through 2009 and into 2010 with all of its financial uncertainties.”
“If the financial markets continue to decline, GuideStone has a strategic plan to add other budget cuts when and if they are needed. If the markets stabilize, GuideStone will carefully monitor its expenses to operate within its modified budget. Even if the markets should begin to rebound, it will likely take an extended period of time to regain the losses experienced during this period of unprecedented market volatility.”
“We believe these reductions are absolutely necessary and we must all be diligent to maximize the resources that remain available to us. More than ever before, we are challenged to find ways to serve our participants in a manner that seeks to enhance their financial security,” Hawkins concluded.
During its nine decades, GuideStone has weathered a Depression, multiple recessions, world and regional wars, terrorism at home and abroad, a dot.com tech bubble and economic upheaval. Hawkins assured participants, “Know that GuideStone remains strong and is well-positioned to continue in its commitment to serving you through these challenging times and is keenly focused on the trust you have placed in us.”
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You should carefully consider the investment objectives, risks, charges and expenses of GuideStone Funds before investing. For a copy of the prospectus with this and other information about the funds, please download a prospectus (pdf) or call 1-888-98-GUIDE (1-888-984-8433). You should read the prospectus carefully before investing. |
Shares of GuideStone Funds are distributed by PFPC Distributors, Inc., a registered broker-dealer and underwriter of the funds, 760 Moore Road, King of Prussia, PA 19406.
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