Investment Report

Q1 2021 Investment Report

As of March 31, 2021

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Following a historically challenging year, Seattle Foundation is grateful to our community who joined in bringing critical support to those most impacted by the pandemic. Together, we helped mobilize over $125 million with generous and committed partners and emergency relief for communities in dire straits. Through our COVID-19 Response Fund, we supported over 600 hundred different community organizations to help people in immediate need. We know that while we all have experienced the effects of COVID-19, some communities felt the devastation far worse, deepening the economic and financial inequities that existed before the pandemic.

Our community and our country have now passed the one-year anniversary of the widespread lockdowns that brought economic activity to a halt, and markets continued to climb in the first quarter with the S&P 500, MSCI EAFE, and MSCI EM indices posting gains of 6.2%, 3.5%, and 2.3%, respectively. In much of the world, the positive sentiment suggesting the worst of the pandemic is behind us continued to grow as people rushed to receive their COVID-19 vaccinations. Although the pace and availability of vaccinations varied considerably by region and country, significant progress towards widespread vaccination was made during the quarter, bringing the world closer to realizing a clearer path forward.

There has been a marked pickup in economic activity; the IMF now expects the global economy to expand by 6% in 2021, led by solid growth in the US and China. Accommodative policies from global central banks and record-breaking fiscal stimulus measures continue to ensure liquidity and stimulate demand. However, the excess liquidity was front and center this past quarter, as the Reddit-fueled stock surge, record-setting SPAC offerings, and the Archegos Capital meltdown all pointed to a robust willingness to take on risk. While each occurred on the edges and only had a transitory impact on broader equity markets, they provide a barometer of sentiment and, in some cases, a cautionary tale about how speculation can go wrong.

The US Treasury yield curve steepened dramatically during the quarter; short-term yields remained anchored by Fed policy, while medium- and long-term yields increased significantly in response to higher inflation and real-growth expectations. Nevertheless, the possibility of further rate increases, coupled with a low yield environment, signal poor prospects for fixed income investors.

Our Balanced Pool is managed as an “endowment” pool and maintains a diversified portfolio that includes exposure to global equity markets, alternative investments, and more conservative asset classes such as US Fixed Income. The investment objective is to provide for annual distributions of 4.5+% while maintaining the purchasing power of the principle over a ten year plus time horizon. The Balanced Pool gained 7.9% over the ten year period ending in Q121, outperforming the benchmark by 30bps. 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 fund holders’ needs including:

  • Socially Responsible Pool, designed to provide competitive economic returns while also meeting ESG (Environmental, Social, and Governance) requirements, gained 1.3% for the quarter,
  • Growth Pool for donors who prefer taking more volatility through both passive and active strategies with intent of producing longer term return,
  • Index Pool, designed for donors who prefer passive investing over the longer term,
  • Intermediate-Term Pool, designed to meet donors’ expectations with a grant-making horizon in the 2-7-year range, and
  • Short-Term Pool for donors with very short grant-making horizons. This Pool intends to preserve capital as best as possible.

Pool performance is available in the 2021 Q1 Investment Report on the next page.

Our previous investment report from Q4 2020 officially wished our outgoing Chief Financial Operating Officer (CFOO) well as she transitioned into retirement to spend time with family. Over the past three years, Kirstin Sandaas was the key proponent in including equity considerations as part of the Foundation’s investment approach to increase the diversity of our active investment managers by pursuing more women and people of color for those roles. Kirstin also led the Foundation’s office operations and people policies for remote work during the pandemic and was a key Foundation partner in standing up the Evergreen Impact Housing Fund. Thank you again, Kirstin, for your leadership and commitment to our mission. Alyssa Farber provided invaluable leadership as our Interim CFOO, which we deeply appreciated.

After a thorough search, we are proud to announce on behalf of the organization and the Board that Josephine Wong will begin as Seattle Foundation’s new CFOO on May 17. For nearly eight years, Wong has served as Deputy Director of King County Department of Community and Human Services, overseeing an annual department budget of $940 million and 500 employees. In her new capacity with Seattle Foundation, Josephine will oversee the Foundation’s investments currently totaling more than $1 billion in assets under management, as well as core functions, including investment management, finance, accounting, information technology, and human capital.

We look forward to collaborating with Josephine as she steps into this critical leadership position for Seattle Foundation. Come May 17, Josephine can be reached at j.wong@seattlefoundation.org.

We are thankful for the opportunity to ignite powerful, rewarding philanthropy to make Greater Seattle a stronger, more vibrant region for all. We are inspired by Seattle Foundation’s new vision to create a thriving region of shared prosperity, belonging, and justice where all individuals and communities have equitable access and outcomes, regardless of race, place, or identity. We invite you to join us in that bold new vision.

Thank you, stay safe, and be well.

Sincerely,

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