Newtown Dumps Russian Stocks: Survey Results
UPDATE: On April 13, 2022, the Newtown Board of Supervisors unanimously voted to divest Twp pension funds of Aberdeen (ABEMX) holdings, which includes Russian & Chinese securities, and put 50% of the proceeds into a stock fund and 50% into a bond fund. Finally, we #StandWithUkraine!
At the March 9, 2022, Newtown Township Board of Supervisors (BOS) meeting, supervisors signaled their intention to rid the township's pension fund of Russian stocks in protest against the invasion of Ukraine by Russia and the apparent war crimes being committed by Russia in Ukraine.
Six percent (6%) of Newtown's pension funds are Aberdeen Emerging Fund stocks (ABEMX), which has holdings in Russian stocks (see table below). The total holdings of ABEMX fund stock in Newtown Township pension funds is $2,227,507. In fiscal year 2021 ABEMX lost 4% of its value. Therefore, regardless of Russian holdings, it makes sense to dump a fund that has been losing money even BEFORE Russia invaded Ukraine and invest the money in other funds that have been making money, even in a index fund that tracks the DOW, which gained 18.73% in 2021. I have no faith that ABEMX will turn around and increase in value in 2022.
On Monday, March 21, 2022, Supervisors were informed that Dahab Associates (Newtown Township pension funds manager) informed the township that ABEMX can’t offload Russian stock because the Russian stock market is not open. However, supervisors have made it clear that "the Township does not want the funds invested in Russian markets and if Aberdeen is not divested, then our funds should be moved out of Aberdeen."
According to Dahab: “The representative from Aberdeen stated that their intent is to absolutely sell off any Russian stock once they are able to do so when the Russian markets reopen. Dahab's recommendation remains to remain in the fund for the time being, and they will monitor the fund as closely as possible.”
Although the Russian stock market resumed limited trading on Thursday, March 24, 2022, it did so under heavy restrictions; e.g., foreigners – INCLUDING ABEMX – are barred from selling.
My Opinion: Let's NOT wait for Russia to fully open its stock market! Let's rid our pension funds of ABEMX stock NOW! Not only does it hold Russian (and Chinese) company stocks, it's losing money!
To gauge the opinion of residents before the BOS votes, I hosted an online survey, which collected 76 responses. The survey asked simply: “Should Newtown Twp Pension Funds Divest Russian Stocks?”
The vast majority - 92% - of respondents were Newtown residents. Approximately 78% of respondents said “Yes, do it immediately & don't wait for ABEMX to act” whereas only 18% said “No, wait for ABEMX to get rid of its Russian holdings when it is able to do so.” The remaining 4% were not sure. See the chart:
Comments in Favor
- “It’s about sending a loud clear message to Putin from places large + small all over the world: we do not choose to do business with a war criminal or in any way enable him to continue his cruel actions.”
- “Waiting for ABMEX to divest Russian stocks will continue to fund Putin's war machine. We must hit Russia as hard and as quickly as possible!”
- “Dump Russian investments at any cost!” • “Newtown Township should sell not only funds holding Russian equities but also shares of Chinese companies such as Alibaba and Tencent. Sell ABEMX and replace it with FMQQ for emerging market exposure.”
- “Investments in China are just as bad. You should also divest the China Bank holdings!”
- “Should not have been investing in such a small economy anyway. Need new advisors if this is the best they can offer. So many other, more lucrative opportunities in the market.”
- “I agree that we should eliminate exposure to the Russian economy, but our timing should be prudent so we don’t incur losses for decisions made on emotion rather that sound financial analysis.”
- “This feels like a distraction from the critical issues facing the Twp.”
- “The township will lose more money by selling ABEMX and Mr. Putin could care less. Township supervisors should not selectively be micromanaging the retirement fund; however, I’d question why the township is using Dahab, a very small company on Long Island for managing its retirement assets when there are much better options.”
DISCLAIMER: This is not an official Newtown Township approved survey. Its purpose is solely to inform John Mack – a Newtown Supervisor – of the public’s opinion regarding this issue.