Investment Performance

Q2 2022 Investment Report
As of September 30, 2022

Allyson Tucker | Chief Executive Officer, Washington State Investment Board
Allyson Tucker, Trustee and Chair of Investment Committee

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
2022 continues to be a very difficult year for capital markets as both equity and bond markets declined in the third quarter. For the first time since the inception of the original Lehman Aggregate Index in 1976, the S&P 500 and what is now known as the Bloomberg Aggregate have posted negative returns for three consecutive quarters, with declines of 23.9% and 14.6%, respectively this year.

Ports in the storm have been few and far between—commodities, a subset of the hedge-fund community, and private assets not being valued by the mood of public markets are notable examples. Other than energy, commodities, and illiquid (i.e., not marked-to-market) private assets, there have been few safe havens in 2022. The combination of high inflation and tightening monetary policy have created a perfect storm for diversified portfolios. As of mid-October, the generic 60/40 portfolio had posted its worst year-to-date performance in over 100 years.

We are optimistic that as we emerge from this period of uncertainty, the high-quality investments held in the Foundation portfolios will begin to lead us out of the storm toward calmer conditions. Patience and diligence are required to weather this period.

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 US Fixed Income. Over the last 10 years, the Balance Pool has gained 5.9% per annum. The Balanced Pool lost 5.4% in the third quarter and registered a 18.9% loss in the last 12 months. The third quarter was a challenging one due primarily to a broad based and deep sell-off across public equity markets globally.

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, lost 6.5% for the quarter. Our Intermediate-Term Pool, designed to meet the expectations of donors with a grantmaking horizon in the 2-7-year range, lost 5.3%. The Foundation also manages a Short-Term Pool for donors with very short grantmaking horizons. This pool, intended to preserve capital as best as possible, gained 0.10% for the quarter. Lastly, the Foundation offers an Index pool, which is all passive, and a Growth Pool. These pools lost 5.7% and 5.0% 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,

Allyson Tucker, Seattle Foundation Trustee and Chair of Investment Committee

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