Investment Report

Q2 2020 Investment Report

As of June 30, 2020

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

Thus far 2020 has brought many challenges to our community, our country, and the world, but Seattle Foundation remains optimistic about opportunities for positive change and the potential to imagine a new and better way forward. A potent combination of health and social crises is impacting all of our lives and the economy in dramatic ways, leading everyone to wrestle with an ever-evolving set of circumstances. In the midst of this uncertainty, we are as focused as ever on our service to the region and our stewardship of philanthropic resources. We are here to support you in making an impact as our community makes its way through these difficult times.

After the global economy came to a standstill and equity markets sold off at an unprecedented rate in Q1, they staged a significant recovery in the second quarter, thanks to fiscal and monetary stimulus and a prevalent view that the world economy would improve. U.S. stocks (S&P 500) gained 20.5% in the second quarter while non-U.S. developed markets (MSCI EAFE) gained 14.9% and emerging markets (MSCI EM) gained 18.1%.

Despite the second quarter gains, however, 2020 will almost certainly be a year of recession. U.S. unemployment remains high, global supply chains remain impaired, and an acceleration of COVID-19 cases in many states has caused authorities to reverse or slow reopening efforts. The International Monetary Fund (IMF) estimates global GDP growth will contract 4.9% this year, though it sees a return to positive growth (predicted at +5.4%) in 2021. Over the next several months, events such as the U.S. election will be closely monitored, as will continued trade tensions with China and other important partners. Longer term, a significant debt overhang will have negative implications on economic growth for years to come. All markets have uncertainty, but our investment approach remains steady. We are maintaining our core investment principles as described in our Investment Policy Statement, which identifies our asset allocations based on our pool objectives and grantmaking horizons.

The Balanced Pool maintains a diversified portfolio that includes exposure to each of the equity markets described above, as well as more conservative asset classes such as U.S. Fixed Income. As equity markets surged in Q2, some non-equity areas of the portfolio lagged, but we still saw significant improvement overall. At the end of Q1 the Balanced Pool had fallen nearly 18% from Jan. 1 but has since recovered considerably. It gained 16.2% in the second quarter and is down 5.0% for 2020 through June 30. These fluctuations reflect ongoing volatility in the market and suggest possible continued turbulence in the months ahead. Performance data about our other investment pools are shown in the accompanying charts.

As our community works to weather today’s crises and imagine a new way forward, Seattle Foundation is relying on decades of experience, learning, and relationships to strive for greater impact. In June, we deployed $9.2 million in Phase 2 grants from the COVID-19 Response Fund to 220 nonprofits and coalitions, focusing on childcare, mental and behavioral health, and emergency financial assistance—three areas where need is urgent. We also stepped up to host and lead All In WA, a coalition of partners and funds providing relief to communities statewide, which has raised more than $57 million to date. Through a series of important partnerships, we helped stand up new funds, including the Black Future Co-op Fund dedicated to supporting Washington’s Black community, the Safe Start Fund focused on a healthy economic transition and recovery, and the East King County Community Fund addressing unique local needs on the eastside of our county.

Now more than ever, we are deeply grateful to support your philanthropy. Thank you for your contributions as we work together to make our region a stronger, more vibrant community for all.

If you have any questions or comments, please don’t hesitate to contact me. I can be reached at 206.515.2105 or k.sandaas@seattlefoundation.org.

Sincerely,

 

 Kirstin Sandaas signature

 

Kirstin Sandaas, Chief Financial Operating Officer