May 18, 2007
Proven Community Investment Fund Now Open to All
by Anne Moore Odell
Access Capital Strategies changes the structure of its Community Investing Fund to allow
individuals and small institutions to invest in the Fund.
Access Capital Strategies is offering a market-rate method for investing in communities, with part
of the funds helping finance lower and moderate-income people’s homes. Access Capital, based in
Boston, MA, has regulatory approval to open its Community Investment Fund (XACSX) to all investors with a minimum
investment of $25,000. Access Capital also announced that it has chosen Voyageur Asset Management
as the new sub-advisor for the Fund.
"What community investing has done over the
past ten years is focused on a bottom-up approach to security creation. What we have done is look
at individual loans, where they are located and what sort of borrowers they support and then build
securities,” said David Sand, President and Chief Investment Officer for Access Capital. “The
result is investment instruments that have the same risk and return characteristics as conventional
issues but have all sorts of double bottom line benefits embedded in them."
Capital’s $500 million Fund has been in operation since June 1998 for banks and other institutional
investors. Beginning this week, the Fund has changed to a continuously offered, closed-end interval
Fund and is now open to individual investors.
The Fund’s mission is to invest in debt
securities that support community development serving low- and moderate-income individuals and
communities across the U.S. The Fund’s activities include investments in home ownership, affordable
housing, education, community health centers and small businesses.
The Fund operates
exclusively in prime- or FHA-insured mortgages that help extend lower cost mortgages to low and
moderate-income homebuyers. Fannie Mae, Freddie Mac or Ginnie Mae guarantees all of the Fund’s
Sand told Socialfunds.com: “We try to be the takeout for
mortgages that are originated by community based lenders or are issued in support of high impact
community lending programs. We hope to create demand for originators who can reach out to borrowers
who might otherwise be victimized by predatory lending.”
Although sub-prime mortgage
lenders have received negative attention of late, Access Capital thinks that low and
moderate-income mortgages are actually a solid investment. Access Capital works with the mortgage
originators to help sell the mortgages as prime.
“Besides the social need to help these
homeowners, we believe that low and moderate-income homebuyers can be more reliable, a better
investment across the broad spectrum,” said Access Capital’s CEO, Ron Homer.
Capital’s investments are typically AAA rated with prepayment protection and private placements
with illiquidity premiums. “When we buy multifamily issues in support of affordable rental housing
we are usually buying securities that cannot be refinanced by the developers; we also are able to
buy nonpublic community investments that may have attractive returns due to their illiquidity. We
see ourselves as long term, patient investors,” Sand explained.
Investors with $1 million
in the Fund can target the specific area of the country they would like to invest in, by county,
census tract, state or region. Although their investment dollars are focused on a specific area,
the investors’ returns are co-mingled with the entire Fund. Currently, 45 states are reflected in
the Fund’s portfolio with the Fund purchasing securities from loans that have provided financing
for more than 8,000 homes.
Washington Mutual (WaMu), a bank headquartered in Seattle, WA,
chose to invest with Access Capital because of their Fund’s community impact, targeted Community
Reinvestment Act (CRA) Investment, and financially sound investment with a market rate return.
“One of the most difficult components for a community development organization is access to
capital. Access Capital helps fill this critical component by providing a secondary market for
community development organizations to improve their liquidity and lending capacity,” said Margaret
Yung, National Community Investment Manager for WaMu. “Additionally, Access Capital targets
investments impacting affordable housing, education and job creation, which are also the focus of
WaMu’s community investing strategy.”
Access Capital has deployed WaMu’s capital in the
states of Washington, Oregon, California, Nevada, Arizona, Texas, Florida, Georgia, New York and
New Jersey, working to positively impact traditionally underserved communities, which include the
nation’s inner cities, rural America, Southwest Native American communities, and low- to
As of December 2006, the Fund’s investors included 132 public
pension funds, corporations, banks, insurers and foundations. As of March 31, 2007, the average
annual returns for the Fund were 7.36% for one-year, 5.19% for five-years and 5.85% since
inception. Sales fees waived on investments of $1million or more. The Funds’ net assets are
currently $477.3 million.
Along with opening up the Fund to all investors, Access Capital
has selected Minneapolis-based Voyageur as
the Fund’s new sub-advisor. Voyageur’s duties include value cash flow, value options, and value
credit risk. Voyageur works with Access Capital as a portfolio manager to decide when to buy, sell,
and hold securities. Voyageur is a subsidiary of RBC Dain Rauscher, which is owned by Royal Bank of
“We chose Voyageur because they are part of a large finance network, but they are
small enough to give the Fund close attention,” said Homer.