Investment Performance
Q3 2025 Report
Thank you for choosing Seattle Foundation as your partner in philanthropy. We know that you share our commitment to creating a region of shared prosperity, belonging, and justice. We appreciate your confidence in us to manage your assets in service of a greater goal: fostering a community where everyone can thrive. We are pleased to share these results from Q3 and we welcome any questions or feedback
Market Conditions
U.S. markets delivered solid gains in the third quarter of 2025, buoyed by strong corporate earnings, optimism around artificial intelligence, and expectations of Federal Reserve rate cuts, even as underlying risks emerged. Labor market concerns intensified after a major downward revision in job growth estimates, while unpredictable tariff policies and the threat of a government shutdown added volatility and uncertainty. Despite these challenges, investors remained confident, focusing on the Fed’s likely easing and the long-term promise of AI-driven productivity and growth.
Investment-grade corporate bonds posted positive returns for the quarter, supported by interest payments and narrowing spreads, which reached fairly tight levels. Lower-rated bonds outperformed higher-quality ones. High-yield corporate bonds also performed well, with gains again driven by interest payments and tighter spreads. Lower-quality bonds led the way, and defaults remain very low. U.S. Treasury yields decreased slightly, resulting in a modestly steeper yield curve.
During the third quarter, the U.S. economy saw modest job growth, mainly in healthcare and social assistance. Job losses were reported in the federal government and energy-related sectors. The unemployment rate increased slightly, while participation in the labor force and the proportion of employed individuals stayed steady. Wage growth was moderate during this period.
Achieving mission-driven returns is a journey that thrives on embracing uncertainty and complexity. By diversifying portfolios, maintaining a disciplined approach to valuations, and conducting independent analysis, especially when facts reveal new insights beyond the consensus, the Foundation can position itself for long-term success.
Portfolios
The Balanced Pool is the Seattle Foundation’s primary investment pool and is actively managed to deliver returns at 5% plus CPI over a long-term horizon. It maintains a diversified portfolio that includes exposure to global equity markets, alternative investments, and more conservative asset classes such as U.S. Fixed Income. Over the last 10 years, the Balanced Pool has gained 8.3% per annum. The Pool returned 3.7% in the third quarter and registered a 10.3% gain in the last 12 months. The portfolio’s forward returns tend to be highly correlated to complexity of an investment climate—greater challenges translate to higher returns.
In addition to our Balanced Pool, we offer other investment options to meet our fundholders’ needs. Our Socially Responsible Pool, designed to meet ESG (Environmental, Social, and Governance) requirements while also providing competitive economic returns, returned 5.0% for the quarter. Our Intermediate-Term Pool, designed to meet the expectations of donors with a grantmaking horizon in the 2-7-year range, returned 3.2% for the quarter. The Foundation also manages a Short-Term Pool for donors with very short grantmaking horizons. This pool is intended to preserve capital as best as possible; it returned 1.1% for the quarter. Lastly, the Foundation offers an Index Pool, which is all passive, and a Growth Pool. These pools returned 6.0% and 6.1% in the quarter, respectively.
We are thankful for the opportunity to support you in creating powerful, rewarding philanthropy to make King County a stronger, more vibrant community for all. We welcome your questions and comments about Seattle Foundation.
Sincerely,
Joseph Boateng
Chair of Investment Committee
