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Investing and 2020: Three things we learned

Posted on Apr 1, 2021, by

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

Kathryn Mawer

What was your impression of 2020? I don’t know about you, but it seemed to me like “rolling with the punches” was the tagline for the entire year!

Amid several critical macro-related events—hostile oil negotiations, the impact of COVID-19 on the global economy, tension between China and the U.S., multi-trillion-dollar stimulus packages, and the volatile U.S. presidential election—2020 proved to be one of the most tumultuous years in recent memory.

As a co-fiduciary, I was keenly aware of the immense responsibility and trust placed on us to grow and preserve the Community Foundation’s assets. While we ended the year pleased with the investment results, there were many lessons learned to arrive at that point. Here are the top three:

#1: Prepare for the unexpected. During the March 2020 sell-off, it was impossible to predict if the market would rebound, flat-line, or continue to drop. To help us stay disciplined, we designed a “what if” scenario analysis for the Community Foundation, assigning probabilities to multiple scenarios and outlining the best course of action to take in each.

#2: Trust your partners. The Community Foundation has several highly capable and talented active managers in its Endowment. They are experts in their respective areas and this informational edge can help them generate returns across all scenarios.

#3:  Make decisions swiftly. The speed of both the sell-off and subsequent recovery was unprecedented. We didn’t have perfect information, yet every day we understood that whether we acted or did nothing, we were committing to an action nonetheless. The best we can do is make thoughtful, yet swift, decisions given the information at hand.

Since starting our partnership with the Community Foundation, we are pleased to have delivered Endowment returns of 39%, exceeding our benchmark of 35%! We know that markets will not always provide the tailwinds we need to generate returns of this magnitude. While we can’t control the markets, we can control our actions and commit to preparation, finding talented partners, and making quick decisions to continue to grow and preserve the Community Foundation’s assets.

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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