Investment Report

Q4 2020 Investment Report

As of December 31, 2020

Kirstin-Sandaas 250 Kirstin Sandaas, Chief Financial and Operating Officer

As we approach the end of a full year of grappling with the COVID-19 pandemic and its effects, we reflect on the challenges of 2020 and the developments in the economy. The 4th quarter of 2020 capped off a volatile year on a high note with major markets appreciating mid-teens percentages. In the US, pre-election uncertainty came off after voters cast their ballots in November electing Joe Biden as the 46th President of the United States. Monetary and fiscal support continue to be a key aspect of the recovery and the expectation is that the incoming administration will support additional stimulus. Furthermore, rapid advances in COVID-19 vaccine development resulted in widespread optimism that a full reopening and recovery could be forthcoming.

Equity markets outside the US experienced a strong rally, particularly those of Latin America and emerging Europe. In the quarter, these two regions, which underperformed the ACWI by nearly 30% in 2020, benefited from increases in the price of commodities and a more constructive economic growth outlook. Interestingly, Chinese markets which account for nearly half the EM Indices, underperformed in the quarter due to economic sanctions, growing frictions between the central government and large corporations, and increased prices for production inputs. A meaningful dichotomy is developing between the commodity exporting emerging economies and commodity importers, like China, within the EM index.

In developed markets outside the US, investors welcomed a resolution to the years-long Brexit negotiations and further rounds of fiscal and monetary support from the ECB. The recently beaten down markets recovered well in the fourth quarter, with the MSCI EAFE Index outperforming the S&P 500 by 4.0%.

The Balanced Pool maintains a diversified portfolio that includes exposure to global equity markets, alternative investments, and more conservative asset classes such as US Fixed Income. Most of the portfolio benefitted from a strong quarter in equity markets, particularly outside the US. At the end of Q1, the Balanced Pool had fallen nearly -18%
but recovered well in a tumultuous year, finishing 2020 with a 12.8% gain. While we are cognizant of ever-changing market conditions, we are optimistic about the possibilities for the Pool to perform well in the years to come.

In addition to our Balanced Pool, we offer other investment options to meet our philanthropists’ needs. Details on that performance are on the second page of this letter. We recently announced a restructured Socially Responsible Investment (SRI) Pool, utilizing the OpenInvest platform, which aligns with the three pillars of Seattle Foundation’s Blueprint for Impact: A Just Democracy, Equitable Economy, and Resilient Environment. The SRI Pool previously offered a mix of various ESG (environmental, social, governance) drivers with less clear impact investment goals.

Seattle Foundation continues to address the urgent needs facing impacted workers and families, especially as we shift from emergency response to longer term recovery. In October, we published a comprehensive report on our COVID relief efforts to date, which details how the Foundation centered equity in our COVID-19 Response Fund (read more on our blog “Equity at the Center of Disaster Response”). Since launching our COVID-19 Response Fund on March 9, 2020, we have raised more than $36.5 million, the majority of which has been distributed to hundreds of nonprofit organizations working on the frontline of the pandemic. The child care sector was hit particularly hard by COVID-19. In response, we launched the Child Care Initiative under All In WA, supporting hundreds of child care providers across our state. Even before the
pandemic, more than half a million of Washington’s children lacked access to licensed care. Funds from the Child Care Initiative will provide vital resources to expand access to affordable child care for working parents with the greatest need while also sustaining the industry of child care providers across Washington.

We are thankful for the opportunity to support you in creating powerful, rewarding philanthropy to make Greater Seattle a stronger, more vibrant community for all. If you haven’t already, I encourage you to explore our 2019 Impact Report, which provides a glimpse into our work last year and the many ways it prepared us to address the formidable challenges of 2020. As always, thank you for the opportunity to support you and your philanthropy.

With immense gratitude, I wanted to share that this will be my final letter as Chief Financial Operating Officer of Seattle Foundation. At the end of 2020, I made the decision to retire in order to spend more time with my family. It has been a deep honor to serve Seattle Foundation during this important and critical time. A search for my successor is well
underway, and in the meantime, I have passed the baton to Alyssa Farber as our interim Chief Financial Operating Officer. She can be reached at a.farber@seattlefoundation.org.

Please don’t hesitate to reach out with any questions and comments. I can be reached at 206.515.2105 or k.sandaas@seattlefoundation.org.

I wish you all peace and health.

Sincerely,

 

 Kirstin Sandaas signature

 

Kirstin Sandaas, Chief Financial Operating Officer