Why are your fees less than the typical bank's fees?
How can you manage project funds better than banks?
Is there more risk in active management?
What is different about your reports?

Why are your fees less than the typical bank's fees?
Lancaster Pollard manages your portfolio for the express purpose of meeting the needs of your project fund. This means the same team that understands and models your project fund is the same one investing your portfolio. The typical bank has two different areas, corporate trust and the investment company, working to fit your account within their separate solutions. This results in two fees rather than one.

How can you manage project funds better than banks?
Lancaster Pollard Investment Advisory Group was initially created to manage project funds. It is what we do. We offer an integrated approach to buying the right investments, managing them and reporting key information with the goal of creating the highest possible liquidity at the lowest possible cost.
Bank trust departments simply do not focus on project fund investing because project funds are a small part of a trust department’s total portfolio. It is difficult for banks to implement low-cost, automated processes on accounts with different draw schedules that may change over the life of the project.

Is there more risk in active management?
Choosing active versus passive management does not necessarily change the level of risk. The nature and amount of risk in project fund management is primarily controlled by the trust indenture. Lancaster Pollard recommends reviewing the allowable investments under the indenture and creating an investment policy for the project fund that may further limit the risk.

Two common approaches to passively managing project funds are money market funds and laddered portfolios. Money market funds provide liquidity for the entire portfolio, even though such liquidity is rarely needed. Offering liquidity generally means lower returns. Laddered portfolios are akin to committing to the estimated draw schedule upon closing, which rarely, if ever, happens. Early liquidation could mean a loss of principle invested.

What is different about your reports?
Lancaster Pollard provides two reports that are unique in project fund management. The first report shows the total return and compares it to relevant benchmarks.

The second report estimates the IRS time requirements for spending project funds and the borrower’s ability to retain any excess returns (arbitrage). This report allows for proactive management of the construction project to potentially minimize future “rebate” payments to the IRS.