Investment Report

As of March 31, 2018

Kristin Sandaas

The judicious stewardship of assets is a principal tenet of Seattle Foundation’s value proposition. The first quarter of 2018 highlights the importance of this fundamental commitment of our Foundation and the value of the many fund options that enable philanthropists to align their investing and their grantmaking.

While the year 2017 represented a 35-year market volatility low, market fluctuations re-emerged in 2018 resulting in a choppy first quarter for equity markets. The Standard & Poor’s 500 lost 0.8% and Non-US Stocks (MSCI EAFE) lost 1.5% during the first three months of the year. Investors saw strong gains in early January, followed by fears of heightened inflation and rising interest rates which drove a market correction in early February. As markets began to rebound, new concerns arose over trade as strong corporate earnings and stalled annual wage growth were announced, followed by another increase in rates by the Federal Reserve.

This volatility generally resulted in short-term losses. However, our multi-year time horizon allows us to position the Balanced Pool past difficult markets with corresponding high emotion levels and short-term thinking. Instead, we focus the portfolio position to generate strong and, at times, asymmetric profit opportunities. In addition, we offer a range of investment options to match a donor’s giving horizon and risk tolerance.

The Balanced Pool, the largest of our investment options, maintains a diversified portfolio that includes exposure to multiple domestic and international equity markets, as well as more conservative asset classes such as U.S. Fixed Income. Despite global equities producing negative returns on the quarter, the Balanced Pool protected assets and gained 0.2%, returning 12.0% over the past 12 months. Strategy execution drove returns (net of fees) in the Balanced Pool over its target benchmark in every time frame, exceeding the benchmark by 80 to 110 bps (net of fees) over the last 3, 5, and 7 years. This is an improvement from the previous quarter, when we exceeded the benchmark by 50 to 90 basis points over the similar time frames. Much of this success is attributable to active management in the equity space, as well as strong performance in alternative areas.

Our Socially Responsible Pool, targeted to Environmental, Social, and Governance (ESG) investments while also providing competitive economic returns, lost 2.0% for the quarter but is up 2.9% over the past 12 months. Our Intermediate-Term Pool, designed to meet the expectations of donors with a grant-making horizon in the 2-7 year range, lost -0.3% this quarter and has gained 4.5% for the year. The Short-Term Pool, designed for donors with very short grant-making horizons, is intended to preserve capital and it gained 0.2% on the quarter and 0.8% for the prior 12-month period. The Index Pool, which is invested in passive vehicles, lost 0.4% this quarter but gained 10.6% for the year. The Growth Pool, which holds more than 80% of the portfolio in equities, was flat this quarter and has gained 13.3% for the last 12 months.

Beyond investment returns, Seattle Foundation strengthened key components of our value proposition during the quarter.

  • We have significantly increased our programming to share deep community insights on key issues, including recent well-attended discussions on homelessness, elephant conservation and youth civic engagement.
  • We advanced our effective philanthropic advising by updating our comprehensive “Giving with Impact” curriculum to support philanthropists to develop strategic and effective giving plans.
  • Seattle Foundation exercised our civic leadership through engagement with the City of Seattle’s and King County’s joint effort to address homelessness, known as One Table.

Through these efforts and more, Seattle Foundation ignites powerful, rewarding philanthropy to make Greater Seattle a stronger, more vibrant community for all. Thank you for your partnership in this important mission.

 Kirstin Sandaas signature

Kirstin Sandaas, Chief Financial Operating Officer