Investment Approach
Thoughtful stewardship of The Community Foundation’s assets is a critical responsibility of the board of directors. The investment program utilizes multiple levels of oversight to manage assets for the benefit of Western North Carolina.
The CFWNC Investment Committee is comprised of local professionals with investment and financial expertise. The Committee has responsibility for all aspects of investment activities, including investment policy, asset allocation and performance review.
An investment consulting firm strengthens and informs the work of the Investment Committee through analytical studies, manager searches and performance data compilation. Multiple investment managers provide value to the Foundation’s investment process through the application of their knowledge and experience in portfolio management.
The Foundation’s goal is to achieve a rate of return sufficient to address the charitable priorities of our funds and fundholders, while not exposing assets to undue risk of significant capital depreciation.
Performance Goals for Investments
- In relative terms, the Foundation’s investments should outperform an appropriate composite of the major indices (S&P 500, Barclay’s Aggregate Bond Index, etc.).
- Equity investment should earn over time an annualized real rate of return of at least 6% (Consumer Price Index + 6%).
- Fixed income investments should earn over time an annualized real rate of return of at least 2.5% (Consumer Price Index + 2.5%).
Investment Options
The Community Foundation allows fundholders to recommend from among multiple portfolios, each under the oversight of the Investment Committee. Portfolios are constructed using differing investment styles and mandates and have unique risk and return characteristics. All CFWNC portfolios represent responsible and thoughtful approaches for the management of long-term charitable capital. Our three most popular are:
Multi-Manager Portfolio
CFWNC’s largest and most fully diversified portfolio utilizes modern portfolio theory in pursuit of the return objective of CPI + 4.5% annualized return over a full market cycle. More than 30 individual managers across asset classes manage portfolio assets through a combination of mutual funds, separately managed accounts and institutional investment offerings. The portfolio utilizes traditional asset classes such as global equity and fixed income as well as complementary strategies such as low-volatility alternative investments and real assets. The portfolio is constructed to participate in bull markets while also providing downside protection during market downturns.
Passive Portfolio
The Passive Portfolio is a traditional equity and fixed income approach that exclusively utilizes passive investment vehicles such as index funds and exchange traded funds for exposure to different market segments. The portfolio benefits from lower investment expenses, relative to active management. A higher allocation to equities benefits returns during bull markets, but downside volatility will exist in market downturns.
Socially Responsible Portfolio
The Socially Responsible Portfolio is a values-oriented investment approach for fund holders who view their investment activities as an extension of their individual value system. The portfolio utilizes an environmental, social & governance (ESG) investment mandate for portfolio management. Companies represented in the portfolio must exhibit positive attributes in terms of environmental responsibility, strong corporate governance and positive societal contributors to their industries and communities. A portion of the fixed income allocation is allocated to mission-related investments that pursue positive returns while providing a community benefit as well.
Investment Performance Information as of September 30, 2024 Reported Net of Investment Expenses
| Qtr. | 1 Year | 3 Years | 5 Years | 10 Years | |
|---|---|---|---|---|---|
| All CFWNC Investments | 5.5% | 19.3% | 3.3% | 6.9% | 5.8% |
Accounts Managed by CFWNC Investment Committee
| Qtr. | 1 Year | 3 Years | 5 Years | 10 Years | |
|---|---|---|---|---|---|
| Multi-Manager Fund | 5.1% | 17.3% | 2.5% | 6.2% | 5.3% |
| Socially Responsible Fund | 6.1% | 19.3% | 2.7% | 6.9% | 5.9% |
| Passive Investment Portfolio | 6.6% | 23.7% | 4.8% | 8.4% | 7.4% |
| American Funds | 6.3% | 24.4% | 4.9% | 8.6% | 7.2% |
| Charitable Trust Pool | 5.8% | 20.7% | 3.7% | 7.0% | 5.5% |
| Equity/Municipal | 5.5% | 18.8% | 2.5% | 6.7% | 5.3% |
| Conservative Allocation | 5.1% | 16.2% | 2.3% | 4.9% | 4.1% |
The Community Foundation has valued investment partnerships with multiple firms that manage client personal assets as well as client philanthropic assets. Current relationships are maintained with the firms in the chart below.
Donor Recommended Investment Relationships
| Qtr. | 1 Year | 3 Years | 5 Years | 10 Years | |
|---|---|---|---|---|---|
| Altamont Capital Management | 6.6% | 20.1% | 3.7% | 6.4% | 5.7% |
| Beacon Pointe | 5.8% | 19.9% | 4.5% | 8.1% | 6.9% |
| Boys Arnold & Co. | 5.6% | 22.6% | 5.4% | 8.6% | 6.8% |
| Colton Groome & Co. | 5.3% | 23.5% | 4.0% | 8.1% | 6.7% |
| Merrill Lynch | 4.2% | 21.7% | 6.6% | 9.6% | 7.9% |
| Modera Wealth Management | 6.2% | 24.5% | 5.8% | 9.5% | 7.9% |
| Raymond James | 5.8% | 23.2% | 4.3% | 7.9% | 6.9% |
| Wilmington Trust | 4.6% | 19.4% | 4.3% | 7.7% | N/A |
| UBS | 5.0% | 17.2% | 1.3% | 4.9% | N/A |
Selected Performance Benchmarks
| Qtr. | 1 Year | 3 Years | 5 Years | 10 Years | |
|---|---|---|---|---|---|
| CPI + 4.5% | 1.5% | 7.1% | 9.5% | 8.9% | 7.5% |
| 60% MSCI ACWI, 40% BC AGG | 6.1% | 23.7% | 4.7% | 7.9% | 6.9% |
| S&P 500 | 5.9% | 36.4% | 11.9% | 16.0% | 13.4% |
| MSCI EAFE Gross | 7.3% | 25.4% | 6.0% | 8.7% | 6.2% |
| Bloomberg Barclay's Aggregate | 5.2% | 11.6% | -1.4% | 0.3% | 1.8% |
Contact Graham Keever for more information about the Foundation's investments.