Investment Report

Q1 2019 Investment Report

As of March 31, 2019

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

Equity markets surged in the first three months of 2019, providing a strong start to this year and positive quarterly gains for all of Seattle Foundation’s investment offerings. We are pleased to share first quarter performance results and the outcome of our diversity investment manager policy, implemented in 2018.

For the first quarter, the S&P500 gained 13.6%, while Non-US Equities (MSCI EAFE) gained 10.0% and emerging equities (MSCI EM) gained 9.9%. Despite the impacts of the longest government shutdown ever, the quarter saw improved jobs data, steady wage growth and controlled inflation.

While economic data was strong, monetary policy decisions proved to be most pivotal. After focusing in 2018 on “normalizing” interest rates and trimming its balance sheet, the Federal Reserve changed course in January to halt rate hikes for the foreseeable future. Equity markets reacted positively with large gains that continued in February and March.

While global growth appears to be slowing, data remains positive in nearly all regions. The European Union projects 1.3% GDP growth for 2019, while China is targeting 6.0 to 6.5%. Looking ahead, politics and policies will certainly play a role in market outcomes, particularly in the United Kingdom and China.

The Balanced Pool maintains a diversified portfolio with exposure to each of the equity markets described above, as well as more conservative asset classes such as U.S. Fixed Income. Through Q1, the portfolio gained 8.1%, which is up 0.3% over the past year (all performance results are net of management fees). The Balanced Pool exceeds its target benchmark over three, five, seven and 10-year periods. Much of this success is due to active management in equities and strong performance in alternative areas.

Our Socially Responsible Pool, designed to meet Environmental, Social and Governance needs while providing competitive returns, gained 7.3% for the quarter and is down -0.9% over the past 12 months. Our Intermediate Pool, designed for donors with a grantmaking horizon of three to seven years, gained 3.8% this quarter and 2.3% for the past year. The Foundation’s Short-Term Pool, for donors with very short grantmaking horizons, gained 0.8% on the quarter and 2.3% over the 12-month period. Lastly, the Foundation’s all passive Index Pool gained 8.3% for the quarter and is up 1.2% over the past 12 months. Our Growth Pool, with more than 80% in equities, gained 10.5% this quarter and 1.3% for the last year.

Highlighting the Foundation’s deep commitment to racial equity, I’m very pleased to report the first-year results of our new policy to implement a diversity lens in investment manager selection. As of April 30, 2019, Seattle Foundation retained six diverse investment managers, representing $127 million of assets under management. This is a doubling in one year, and the start of a dedicated effort to demonstrate our equity commitment in our policies and practices.

Seattle Foundation announced two impactful new efforts in early spring. The first is our creation of a $1 million Regional Census Fund in partnership with the City of Seattle and King County. This fund will support community-based efforts to reach hard-to-count communities and ensure a complete, accurate and inclusive Census 2020 count. We also made a significant investment of $500,000 to support diverse and inclusive programming at Seattle’s future Waterfront Park, to make this new public space welcoming to all.

We are delighted to welcome Allyson Tucker, Senior Investment Officer of Risk Management and Asset Allocation at the Washington State Investment Board, as our newest Trustee. She has provided key guidance as a community representative of our Investment Committee since 2017.

Seattle Foundation’s strong, consistent investment performance and impressive committee membership reflects the dedication and brilliance of Mary Pugh, whose service over the past 14 years as both Investment Committee chair and member, concludes in June. Mary’s intellect, integrity and commitment to diversity and community set the standard for our approach to our paramount responsibility as a community foundation: the judicious stewardship of charitable assets. We are deeply grateful to Mary. Our community has benefitted immensely from her service.

As always, thank you for your partnership in our mission to make Greater Seattle a stronger, more vibrant community for all.

Sincerely,

 Kirstin Sandaas signature

 

Kirstin Sandaas, Chief Financial Operating Officer