Our Investments

Berkshire Taconic Community Foundation preserves and protects your investments and charitable intentions forever. When you establish an endowment through BTCF, your gift continues to grow and benefit your community now and in the future. The pooled resources of BTCF’s many donors gives you access to a highly diversified portfolio with world-class money managers who would not otherwise be available to you.

As stewards of the charitable resources entrusted to us, BTCF works to manage your investments guided by our nationally recognized Investment Committee – A group of board and community members with deep institutional investment experience. The Committee employs the top Investment Managers in each class.

Investment Strategy

BTCF’s investment strategy [PDF, 153KB] is to maximize return while preserving capital and liquidity, producing consistent and stable growth with low to moderate risk. Our goal is to grow your endowment so that you can grant more to the causes you care about.

Investment Pools & Performance

Current Market Review [PDF, 845KB]

Based on preliminary performance, Berkshire Taconic Community Foundation’s portfolio appreciated 1.5% in the fourth quarter. Over the course of the calendar year, it gained 7.3% and outperformed its benchmark by over 100 bps. Comparisons to the benchmark are favorable over all time periods ended December 31, 2016. Since inception in August 1999, the portfolio has generated an annualized return of 6.4%, outperforming a global blend of assets (65% MSCI AC World Index/35% Barclays Global Aggregate Index) by approximately 200 bps per year with substantially less volatility. 

The surprise election of Donald Trump in November ignited a rally in risk assets, with domestic and emerging markets equities, as well as commodities and natural resources, posting significant gains in the quarter and year. As the market sought to anticipate the new administration’s policies, small cap domestically oriented stocks, financials and industrials outperformed. In contrast, health care and real estate stocks finished the quarter lower. After weakening in the third quarter, the U.S. dollar reversed course, serving as a headwind for U.S. investors in emerging markets and wiping out the gains to U.S.-based investors in developed markets. Yields and inflation expectations rose during the quarter, presaging tax cuts and increased public and private spending expected under a Trump administration. Additionally, the Federal Reserve moved forward with its second 25 bps rate hike in as many years, and indicated an increased likelihood of additional hikes in 2017. With interest rates rising across the yield curve, fixed income securities sold off broadly in the quarter but remained positive year-to-date. Natural resources, commodities and other inflation-sensitive assets appreciated in the quarter and year, providing a boost to diversified portfolios like Berkshire Taconic’s. 

The foundation’s portfolio of global equities experienced slightly better results in the fourth quarter than the MSCI All Country World Index (1.5% vs. 1.2%), as the benefits of an overweighting of domestic equities helped offset the impact of some underperformance within the segment. Conversely, the portfolio’s international developed equities segment lost value in the quarter but proved a source of relative performance, with select managers outpacing their benchmarks. The foundation’s equity managers returned 7.6% over the course of the calendar year, keeping pace with the benchmark (7.9%) despite underperformance from select managers. 

Hedge fund performance was mixed with long/short managers tending to lag the equity markets, while event-driven and distressed managers generally generated better results. In aggregate, the portfolio’s hedge fund managers advanced 2.1% in the quarter, exceeding the HFRI Fund of Funds Composite Index by over 100 bps. The segment generated a 7.7% return for the calendar year, materially outpacing the Index (0.7%). Generally, absolute return managers outperformed long/short managers who captured about 50% of the equity upside in 2016. Among absolute return strategies, distressed credit accounted for a significant portion of returns. Energy credit continued to provide a tailwind for distressed managers, as oil prices rose and many companies restructured their balance sheets in the second half of the year. Macro manager results varied greatly during the quarter. Sharp moves in currencies and commodities were troubling for trend-following and systematic trading strategies. However, many discretionary traders profited from the volatility in rates and currencies.

U.S. Treasury yields rose sharply following the election, returning to year-end 2015 levels after declining in the first half of the year. The yield curve steepened amid growing potential for expanded fiscal policies and rising inflation expectations. The portfolio’s sole credit manager, Dodge & Cox, navigated the quarter and calendar year well, finishing well above the benchmark in both periods. 

Inflation expectations also rose following the election and due to widening breakeven levels, TIPS outperformed their nominal Treasury counterparts across the entire term structure during the quarter. The foundation’s position in the Vanguard Inflation-Protected Securities Fund proved to be a benefactor of these circumstances, although we remain underexposed to other real assets such as commodities, natural resources and real estate. The foundation has recently made a commitment to EnCap Partners, a private equity fund in the energy sector, and expects to benefit further from these changes in the coming year.

The foundation’s portfolio remains highly diversified and has been built for a variety of market conditions in an effort to generate long-term growth in excess of inflation and spending needs. While mindful of the market environment, the investment committee remains committed to the long-term, strategic management of portfolio assets, making modest adjustments to the asset allocation and underlying managers when necessary. The portfolio is highly liquid and well-positioned to take advantage of new opportunities as they are identified. *Total assets exceeded $121.6 million at December 31, 2016, with a distribution of 58.8% global public equity, 6.3% global private equity, 24.8% flexible capital, 1.1% inflation hedging, 7.2% global fixed income and 3.2% liquid capital. 

For more information on the foundation’s investment performance and managers, please contact Vice President for Finance and Administration A. J. Pietrantone by email or at 413-229-0370.

**The Managed Pool benchmark is calculated as a weighted average of standard financial industry indices in each asset class and appropriate to individual managers based on objectives.

Managed Pool Current Performance [PDF, 138KB]

5.3% 10-year average annual return* / 8.0% 5-year annual return*

Created for the bulk of our funds’ assets and structured on the premise that a bias toward quality equity investments will ensure the best total return over time, although it may be more volatile over the short-term. Average annual investment manager fees total 1%.

*Net of investment manager fees

View a description of the asset mix.

Income Pool Current Performance [PDF, 90.3KB]

4.8% 10-year average annual return* / 7.5% 5-year annual return

Appropriate for funds where minimizing risk and not being subject to short-term equity volatility is important. This pool does not take advantage of potential long-term equity growth. The average annual investment management fee is 0.46% and the allocation is 100% fixed income and cash equivalents.

*Net of investment manager fee

Minimum Risk Pool Current Performance [PDF, 96.5KB]

0.8% 10-year average annual return* / 0.0% 5-year annual return* 

Accommodates funds that are generally short term in nature and are focused on investment of capital with minimal risk. The return fluctuates with daily money market rates. The investment management fee is 0.0% for this Pool.

*Net of investment manager fee

SRI Pool Current Performance [PDF, 97KB]

7.6% 7-year average annual return* / 7.5% 5-year annual return*

Created in March 2009 for those individuals or organizations that want fund assets invested with an environmental, social and governance screen, and are willing to forgo annual return potential in certain market segments of the broader economy, that may or may not affect total return. The average annual investment management fee is 0.37% and the allocation is 60% equities and 40% fixed income and cash equivalents.

*Net of investment manager fee

About This Photo
About This Photo
Columbia County, NY. Photo by David Lee

Investment Policies & Forms