WASHINGTON, Nov. 20 /PRNewswire/ -- The AFL-CIO Housing Investment Trust (HIT) announced today that it has outperformed its industry benchmark by 93 basis points for the one-year period ended September 30, 2008, outperforming most other fixed-income fund managers. An independent ranking places the HIT as one of the nation's "top 10" performers for the period in a comparison of similar fixed-income investment vehicles.

The HIT, which was created by the union movement more than 40 years ago, manages over $3 billion on behalf of participating pension plans that have union member beneficiaries. The HIT achieved a net one-year return of 4.58% at September 30. During that one-year period, the HIT also achieved housing and employment goals important to its union beneficiaries, with investments that generated over 2,200 housing units and 1.5 million hours of union construction work.

The "Top 10 Manager" ranking came from Morningstar, Inc., which placed the HIT eighth for the one-year period and fourth for the five-year period, as reported in Pensions & Investments on November 10, 2008. The ranking, based on gross returns, compared the performance of U.S. intermediate duration collective investment trusts that have similar risk profiles. The HIT's net returns, which reflect the deduction of expenses, compared favorably to the Morningstar top-ranked funds that reported net returns for these periods.

Richard Ravitch, chairman of the HIT's board of trustees and a partner in Ravitch Rice & Company, said that HIT's strategy of investing in high credit quality fixed-income assets has served union pension investors well during the economic turmoil of recent months. HIT invests primarily in mortgage-backed securities with the goal of providing competitive returns as well as generating affordable housing and union jobs. The HIT has never invested in securities backed by subprime mortgages, and it has never utilized leverage as part of its strategy.

Clearly, the HIT's performance demonstrates that there is a safe and sound way to invest in mortgage-backed securities, an area where many investment bankers and funds have taken tremendous losses over the last 18 months.

"Investors look to the AFL-CIO Housing Investment Trust to invest their pension capital responsibly," Mr. Ravitch said. "We have witnessed a period when many other investors in the market ignored risk and sought higher returns without fully understanding the potential for losses. The HIT has remained disciplined throughout this period and will continue to be guided by its philosophy of prudent, socially responsible investing."

Chang Suh, HIT executive vice president and chief portfolio manager, further explained the investment strategy. "The HIT has always focused on fundamentals: consistent performance, capital preservation and predictable income," Mr. Suh said. "The HIT invests primarily in the highest credit quality securities, which are issued by the U.S. government and government-sponsored enterprises. Recent market events have demonstrated why these high credit quality fixed-income investments are important for pension plan portfolios."

Mr. Suh said that at a time when unemployment numbers are rising and people are losing their homes, HIT investments have generated jobs as well as creating or preserving affordable and workforce housing around the country. "We expect opportunities for responsible investing to increase significantly in 2009 and 2010, which would help the HIT maintain its competitive performance and its positive impact on union job creation," Mr. Suh said.

The HIT outperformed its benchmark, the Lehman Brothers Aggregate Bond Index, by 1.13 percentage points for the third quarter ended September 30, 2008, and 0.95 percentage points year-to-date. The HIT also outperformed its benchmark for the 1-, 3-, 5-, and 10-year periods ended September 30.

The HIT seeks to capture excess yields by investing in government and agency insured mortgage securities. Additionally, the HIT has avoided the excessive risk-taking (e.g., subprime loans) and irresponsible investing that have led to perhaps the greatest market failures in the U.S. since the Great Depression. The HIT does not invest in corporate bonds, whose poor performance during this period contributed to the lower returns of the benchmark.

"The HIT's investment strategy has always been based on fundamentals and on investment over a long time horizon and emphasizes investments in the highest credit quality securities," Mr. Suh said. "Over 94% of the HIT's portfolio is guaranteed by the U.S. government or a government-sponsored enterprise, and another 3% is AAA-rated. The HIT's yield advantage of approximately 50 basis points over its benchmark should lead to higher total returns over time."

Mr. Suh said the HIT expects slow growth and liquidity issues to challenge the economy and the financial markets for an extended period. "For investors seeking to reduce credit risk and for investors seeking higher returns than Treasury yields, the HIT's strategy of emphasizing investments in the highest credit quality securities bodes well for this type of market," Mr. Suh said.

About the Morningstar Rankings

The rankings reported in Pensions & Investments compared 104 commingled intermediate government and intermediate-term bond managers for the one-year period and 88 for the five-year period based on performance results self-reported to Morningstar. Rankings for Pensions & Investments' U.S. Bond Collective Investment Trusts table are provided by Morningstar using its Principia Separate Account database, based on gross returns for periods ended September 30, 2008. The rankings for Pensions & Investments are comprised of Morningstar's Intermediate Government bond category (portfolios which have durations between 3.5 and 6 years and at least 90% of their bond holdings backed by the U.S. government or by government-linked agencies) and Morningstar's Intermediate-Term bond category (portfolios which invest primarily in corporate and other investment-grade U.S. fixed income issues and also have durations of 3.5 to 6 years). The findings can be viewed on the Pensions & Investments website at: http://www.pionline.com/apps/pbcs.dll/article?AID=/20081110/CHART/311109972/-1/TOPPERFORMINGMANAGERS

The rankings are based on gross performance numbers and reflect no deduction for expenses.

About the AFL-CIO Housing Investment Trust

The AFL-CIO Housing Investment Trust is a core-plus, fixed-income investment company registered with the Securities and Exchange Commission. The HIT has more than 350 investors and over $3 billion in assets. The HIT invests primarily in fixed-income investments such as multifamily and single family mortgage-backed securities. The investment objective of the HIT is to provide competitive returns for its investors and to promote collateral objectives such as the construction of housing and the generation of employment for union members in the construction trades and related industries. Since its inception, the HIT has invested over $5 billion to finance more than 80,000 units of housing nationwide, generating more than 50,000 union jobs.

Investors should consider the HIT's investment objectives, risks and expenses carefully before investing. A prospectus containing more complete information may be obtained from the HIT by calling the Marketing and Investor Relations Department collect at 202-331-8055 or by viewing the HIT's website at www.aflcio-hit.com. The prospectus should be read carefully before investing.

Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Statements concerning financial market trends are based on current market conditions, which will fluctuate. There is no guarantee that any investment strategies will work under all market conditions, especially during periods of downturn in the market. All statistics are current as of September 30, 2008, unless otherwise noted.

This is a press release only for the HIT and not for any other investment vehicle. This should not be deemed an offer to sell or a solicitation of an offer to buy shares of any of the other investment vehicles listed or described in the Pensions & Investments table.

    Contact: Michael K. Frisby,
    202-625-4328

SOURCE AFL-CIO Housing Investment Trust