Investment Report

As of September 30, 2017

Tony MestresI’m pleased to share the positive 2017 third quarter performance for Seattle Foundation’s philanthropic investment funds. Our judicious stewardship of assets is central to our value as a partner and we recognize the importance of providing investment choices and results that support your lifetime and legacy philanthropic goals.

Our favorable returns were supported by continued growth in equities in the U.S., with the Standard & Poor’s 500 Index gaining 4.5% during the quarter. The economy entered its fifth consecutive quarter of earnings growth, while continuing to benefit from wage growth and low inflation. Outside the U.S., economies have been growing at an even faster pace in recent quarters, as reflected in key indices with the developed markets (MSCI EAFE) gaining 5.4% and emerging markets (MSCI EM) gaining 7.9% this quarter. Industrial production hit its highest level in the European Union in six years, while unemployment is at its lowest level since 2009. Japan’s economy has now expanded for seven straight quarters and inflation there, while low, is in positive territory. China continues to report strong GDP growth, however there are continued risks with corporate and personal debt that has been utilized to help fuel a stronger equity and real estate market.

These economic factors have positively impacted our investment returns. The Balanced Pool continues to maintain a highly diversified portfolio with active management in multiple equity markets. Strong performance in alternative areas, together with an allocation to conservative asset classes such as U.S. Fixed Income, led to a third quarter gain of 3.6%, and 12.9% year to date. We continue to highlight execution of our total return strategy as the Balanced Pool outperforms its target benchmark by 60-100 basis points (net of fees) over the latest three, five and seven years.

Q3 2017 Balanced Pool graphs 

Our Socially Responsible Pool, designed to meet environmental, social and governance objectives while also providing competitive economic returns, gained 4.7% in third quarter. The one-year return is 19.8%, well above target benchmark.

Q3 2017 Socially Responsible Investment pool graphs 

Our Intermediate-Term Pool, designed for donors with a three- to seven-year grantmaking horizon, gained 1.8% this quarter, and 5.4% year to date. The Short-Term Pool gained an additional 0.3% on the quarter, bringing year-to-date return to 0.7%, slightly above target benchmark. 

Q3 2017 Intermediate pool graphsQ3 2017 Short-Term pool graphs

Lastly, we report on our two newest pools. The Index Pool, which has an all-passive investment strategy, gained 3.2% this quarter, and is up 12.3% over the past year. The Growth Pool, which holds more than 80% equities in the portfolio, gained 4.6% this quarter, and 14.7% over the past year.

Q3 2017 Index Pool graphs 

 

Q3 2017 Growth Pool graphs 

We recently welcomed a talented new member to our leadership team in the selection of Kirstin Sandaas as our new Chief Financial and Operating Officer. Previously Chief Financial Officer at Foss Maritime, Kirstin’s multiple core strengths in finance and operations include deep experience in strategic financial planning, accounting and oversight of large investment portfolios. Her passion for leadership excellence will propel the evolution of the Foundation forward at an even faster pace in support of our mission.

We look forward to working with many of you during these final months of the year and please let our team know how we can support you with your year-end giving, and tax and estate planning.

Sincerely,

Tony Mestres' signature




Tony Mestres
, President & CEO

 

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