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What is the Community Foundation’s Investment Approach?

Posted on Jan 19, 2021, by

By Kathryn Mawer, CFA, CAIA Vice President / OCIO Advisor, FEG Investment Advisors

The Community Foundation supports donors, families and nonprofit agencies in their endeavor to make a permanent impact on the community through the use of a long-term approach called an endowment. The endowment accepts, holds and invests donations from charitable contributors for distribution through grants to support the missions of local nonprofit organizations.

Kathryn Mawer

The goal of an endowment is to support the community today and for generations to come. That means the endowment needs to generate enough returns to cover the cost of expected distributions plus inflation.

How does that happen? The Community Foundation and its Investment Committee of local financial leaders hired an outsourced chief investment officer (OCIO), FEG Investment Advisors, to design an investment approach capable of achieving the desired return without undue risk.

The strategy is two-fold:

  • Focus on the long-term and accept short-term volatility for longer-term gains
  • Diversify to buffer against extreme market swings

In today’s environment, fixed income strategies (or bonds) produce a low return of about 1.2 percent. While considered relatively safe investments they will not generate the returns the Community Foundation endowment needs to be sustainable. Therefore, the endowment invests largely in equity strategies (or stocks), which have higher return expectations but will also fluctuate in value more than bonds.

The endowment is further diversified to include investments in different industries (e.g., technology, healthcare), different geographies (i.e., U.S., Europe, Asia), and different asset categories (i.e., stocks, bonds, real estate) to both participate in earnings and protect against market declines.

FEG is honored to support your donor intentions to strengthen the Fox Valley Region for current and future generations.  We are committed to delivering the performance you expect.

The Community Foundation prudently invests charitable funds so they may strengthen the community for current and future generations, carrying out our generous donors’ wishes to impact their communities and make a difference in the lives of others. Learn more about our investment strategy.

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