Investment Performance
Q4 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 Q4 and we welcome any questions or feedback.
Market Conditions
The fourth quarter of 2025 saw international and emerging markets outperform U.S. equities amid a notable regime shift, with investor sentiment remaining positive as the Federal Reserve enacted expected rate cuts. Non-U.S. assets gained support from favorable liquidity conditions and a weaker dollar, which helped reduce the valuation gap between the U.S. and foreign markets. Value-style equities experienced multiple expansion, while growth-style equities saw compression.
Investment-grade corporate bonds experienced modest gains for the quarter, with income from coupons balanced by pressures from rising Treasury yields and slightly wider spreads. Higher-quality bonds outperformed their lower-quality counterparts. High-yield corporate bonds also delivered positive returns, driven by coupon income and tighter spreads. U.S. Treasury yields reflected divergent movements during the quarter, with shorter-term yields declining and longer-term yields edging higher, resulting in a wider yield-curve spread (approaching its historical norm). The shape of the yield curve reflects strong, ongoing economic growth, persistent inflation, and fiscal imbalances, alongside signs of labor market softness and disinflationary trends driven by technology advancements.
The U.S. economy ended the year with modest job gains, though employment growth was noticeably slower compared to the preceding year. Sectors like healthcare, social assistance, and food service saw expansion, while the federal government experienced notable job losses. The unemployment rate remained steady alongside subdued wage growth while inflation persisted, with the most significant price increases seen among utilities, energy, food, and medical services.
Achieving mission-aligned returns will require navigating uncertainty while accepting complexity. The Foundation is positioned for lasting achievement by spreading investments across different assets, carefully evaluating valuations, and performing its own research, particularly as new information emerges that challenges commonly held viewpoints.
Portfolios
The Balanced Pool is the Seattle Foundation’s primary investment pool and is actively managed to deliver returns at 5% plus CPI over the long-term; 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% annualized. The Pool’s diversified strategy makes a compelling case for its positioning, supporting its north star of preserving capital while pursing long-term growth.
In addition to the 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 2.5% 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 1.5% 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 and returned 1.0% for the quarter. Lastly, the Foundation offers an Index Pool, which is fully passive, and a Growth Pool; these pools returned 2.6% and 2.8%, respectively, for the quarter.
We are thankful for the opportunity to support you in creating powerful, rewarding philanthropy to make our region a stronger, more vibrant community for all. We welcome your questions and comments.
Sincerely,
Joseph Boateng
Chair of Investment Committee
