New accounting rules for credit unions are shaking up the way they handle their investment portfolios. With the requirement to record losses in their investment accounts on a monthly basis, the pressure is on for credit union boards, especially those heavily invested in the volatile stock market.
The recent surge of retail investors and easy access to investment apps have only added to the market’s unpredictability. With news cycles fueling market swings, any random event can send stocks plummeting, leaving credit unions vulnerable to significant losses.
To combat this volatility, credit unions are turning to alternative, non-market correlated investments. By diversifying their portfolios with assets like private equity and private credit, credit unions can reduce overall portfolio volatility and shield themselves from the daily whims of the stock market.
While committing to traditional private equity or credit funds may seem daunting for smaller credit unions, the rise of Interval Funds offers a more accessible entry point. With quarterly liquidity and simplified reporting structures, Interval Funds provide a gateway to these lucrative asset classes without the prohibitive investment minimums or lock-up periods.
By embracing non-market correlated investments, credit unions can not only navigate the new accounting rules more confidently but also potentially bolster their financial performance, attract talent, and drive growth. In an increasingly volatile market, this strategic shift may just be the key to long-term success for credit unions looking to stay ahead of the curve.
