Investing for Charity

As part of our process, we work regularly and extensively with our clients to stress test the linkage between both organization and investment risk.

FS: What are some of the trends you're seeing, and what do you forecast in the coming months?

LVD: We believe that we are in a high-risk, low-reward environment that should begin to reward high-quality companies and managers that employ deep fundamental research and analysis.

By way of example, we are currently recommending clients invest with managers who have taken an overweight position to global, multinational companies that are trading at attractive valuations.

A summary of our 
current tactical positioning can be found on our website.

FS: What's your long-term forecast for where nonprofits should be investing their dollars?

LVD: A vast majority of nonprofits have similar goals and objectives. More specifically, most attempt to achieve spending plus inflation returns and grow their assets in perpetuity. To that end, our clients are more growth-oriented in their investment approach.

Achieving this objective in the current economic climate could prove to be particularly challenging. As such, consistency and growth are important considerations when making portfolio recommendations to clients.

For many of our clients, hedged equity is an effective strategy that we utilize to complement their long-
only equity allocation. These strategies, when implemented correctly, should provide equity-like returns and reduce the overall volatility of the portfolio.

Managing volatility is important when considering annual spending 
formulas and portfolio withdrawals. Moreover, we have worked extensively this year with our clients to implement investments that are designed to protect the portfolio from inflationary pressures but are not dependent on inflation for a successful investment outcome. FS