By: Robert Perry & Jason Haley | Credit Union Business

 

The current interest-rate environment presents challenges for credit unions. The Fed has continued to raise rates and while industry-wide financial performance has improved, net interest margins remain thin. Appropriately pricing deposits and loans while effectively managing the investment portfolio can be difficult, especially as many credit union CFOs wear multiple hats.

 

However, if your credit union has a well-thought-out investment philosophy along with a disciplined strategy and framework for making investment decisions, it becomes fairly independent of interest rate levels. This is why ALM First advises credit unions to focus on process, rather than simply considering various bonds and securities to add to their portfolios.

4 Tips for Success

1.   Be patient. Long-run institutional investing is sometimes like watching paint dry – a little boring and a little routine.

2.   Have a sound, research-oriented and well-defined investment philosophy.

3.    Remember, the decision-making methodology we utilize will contribute much more to long-term performance than the individual decisions themselves.

4.   Don’t make investment decisions solely based on what you are being shown by brokers. Brokers provide a necessary service but, in the end, they simply offer the ingredients to a recipe that has already been developed.

 

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