Community Capital Management, based in Weston, Florida, has been investing in low and moderate income community bonds for two decades. It oversees $ 3.5 billion, including $ 3 billion in the
CCM Community Impact Bond
funds. The bonds and loans it purchases help banks comply with community reinvestment law.
So far this year, the CCM fund (ticker: CRATX) is down 0.6% in a tough bond market, beating both
The morning starof
category of intermediate government funds as well as its benchmark, the Bloomberg Barclays US Government Index. We spoke with David Sand, the impact manager of Community Capital, on the first anniversary of George Floyd’s death in police custody, which catalyzed a wave of protests against police brutality and the racial inequality. Read on for an edited version of the conversation.
Barron: It has been a year since George Floyd died. What has changed in the way you do business?
David Sand: Our job is to invest in underserved communities and underserved people. For 20 years our money has funded people at the bottom of the income scale, and those people are disproportionate minorities. We have geographic data, census data, a lot of data. What has changed is the willingness of counterparts to provide us with data on race, gender and ethnicity. [to allow Community Capital to focus its lending].
Prior to George Floyd’s death, we invested in mortgage-backed securities for women and minorities. People wanted something new to express their concerns. We launched our Minority Cares strategy on June 19, 2020 [a holiday marked on June 19 to commemorate the emancipation of enslaved people in the U.S.].
What is the Minority Cares strategy?
We have 18 impact themes at Community Capital. We found that in eight of them, the greatest preponderance of capital goes to minority communities, businesses and people of color. There are now $ 500 million in assets deployed in the strategy. We have over 40 clients directing money to the initiative. We report on the investments we make, including the number of loans made to minority borrowers, female borrowers, racial and ethnic areas of poverty, including Asian Americans. The goal is to have $ 2 billion in the strategy over five years.
What is a typical investment?
We have invested in an affordable mortgage pool tailor-made for low- and moderate-income Black borrowers. It included 16 loans in nine different states. Seven of the loans are made to black female borrowers. Three are in high poverty census tracts, 10 are in majority minority census tracts. We have invested in a commercial mortgage-backed security agency financing low-rental housing tax credit property where 75% of the population are minorities and 21% live below the poverty line. We also invested in a corporate bond issued by Howard University. Historically black universities and colleges have a long overdue moment of recognition.
Community Capital recently published a report about the Black Home Ownership Gap in the US What did you find?
There is a gulf between black and white homeownership rates, even when you hold income, credit scores, and education constant. It’s stubborn. It affects families and communities from generation to generation. Over the past year, by all the statistics we see, the gap has widened. The people most affected for health and the economy during Covid-19 were minority communities. We’re pretty sure when the statistics come out that the homeownership rate will have declined in 2021 rather than increased. It is more important that there are solutions and capital [to mitigate it]. We are an agent for this.
Inflation is on the rise. How do you position your fund?
We need to take [Federal Reserve Chairman Jerome] Powell on his word that he wants to see inflation above 2% for an extended period before believing that deflationary pressures in the global economy before Covid have been addressed. I’m old enough to remember hyperinflation in the 1970s. It was a very pernicious form of low and middle income taxation. We are very, very far from that hyperinflation scale.
We are keeping the duration on the short side compared to our benchmark. We are always very positive about our product universe.
What does the offer of potential investments look like?
It varies by sector. Single-family mortgages are very sensitive to interest rates, but a lot of the world we work in is first-time homebuyers coming out of tenancy, and it will be interesting and interesting for them. Most important is what happens to the economy. Jobs are coming back and, it is reasonable to assume from a macro perspective of US GDP, we are out of the pandemic.
The supply of taxable municipalities was very strong towards the end of 2020 and continues this year. There may be an entirely new category [of investment] whether the infrastructure bill includes recognition of human capital infrastructure, such as the care economy – daycares, daycares, home care and community health centers. All are part of civic and community infrastructure. People realized during Covid that it was so important, that it is part of our national security.
Write to Leslie P. Norton at [email protected]