Investments - Learn About BTCF - Berkshire Taconic Community Foundation

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

End of Year Market Review 2018 [PDF]

January Market Review 2019 [PDF]

POOL  Q4 2018
 
YTD
2018
 
1-YR 
RETURN  
3-YR
RETURN  
5-YR
RETURN 
7-YR
RETURN  
10-YR
RETURN  
 ASSETS UNDER MGMT
  Primary Managed Pool -7.8  -3.2  -3.2  6.8  5.3  7.6  8.9  $128M
Managed Pool Benchmark* -7.0  -3.8  -3.8  5.7  4.4  6.8  7.9 N/A
  Traditional 65% Equities /
  35% Bond Index
-8.0 -6.4  -6.4 5.4 3.3 5.9 7.2 N/A
  Socially Responsible Pool -8.1  -4.1  -4.1  5.2  5.3  6.4  N/A  $7.7M
  Income Pool 0.3  -0.2  -0.2  2.9  2.1  2.4  4.1  $0.61M
  Minimum Risk Pool 0.5  1.5  1.5  0.7  0.4  0.3  0.2  $1.4M
 

Primary Managed Pool Performance as of December 31, 2018

Based on preliminary performance, Berkshire Taconic Community Foundation’s managed pool portfolio declined 7.8% in the fourth quarter of 2018 to close the year with a 3.2% decline net of investment management fees. The portfolio underperformed the policy index (-6.7%) for the quarter largely as a result of a modest overweighting to global public equities. The portfolio outpaced the actual index (-8.1%), reflecting the better relative results of the foundation’s investment managers. Over the trailing one-year period, the portfolio was 60 basis points ahead of the policy index and 130 basis points ahead of the actual index.

Long‐term risk‐adjusted results remain favorable with the portfolio leading the custom benchmarks over the three‐, five‐, seven‐ and 10‐year periods ended Dec. 31. Since inception (August 1999), the portfolio has annualized at 6.4% net of fees, materially outperforming a global blended passive index comprised of the 65% MSCI AC World/35% Bloomberg Barclays Global Aggregate indexes which returned 4.5% over the same period. The foundation’s portfolio has also experienced lower volatility (as measured by standard deviation) relative to the global blended benchmark. Over the trailing 10 years, the portfolio exhibited 22% less volatility than the blended passive index.

Capital markets experienced heightened volatility at the end of 2018 as investor sentiment shifted. Concerns over global growth, ongoing trade wars, higher U.S. interest rates and corporate profit trends resulted in a sharp sell-off of many risk assets as the fourth quarter unfolded. U.S. equities posted gains for most of the year, with the Russell 3000 Index reaching a year-to-date cumulative high of 11.3% on Sept. 20. However, a 14.8% drop from that all-time high caused the index to end the year at a 5.2% decline. Most asset classes (aside from cash) posted negative absolute returns for the year, although high-quality fixed income protected capital in the fourth quarter with interest rates rallying sharply amidst slowing growth expectations.

U.S. Treasury yields rose across the curve through most of the first nine months of 2018 due to Fed policy rate hikes, slowing Fed purchases and heavier Treasury issuance. After reaching a calendar year high of 3.24% in early November, the 10-year U.S. Treasury yield fell sharply, ending the year at 2.69%—up just 23 basis points for the year. In this environment, the yield curve flattened as the yield on the three-month T-bill rose 106 basis points to 2.45%, moving in parallel to the Fed’s four policy rate hikes during the year. The spread between the two-year and 10-year Treasury fell 37 basis points to 0.18%. The U.S. dollar (USD) reacted favorably to domestic fiscal stimulus and to Fed rate hikes. The Dollar Spot Index, a measure of the strength in the USD versus six developed market counterparts, rose 4.4% for the year. The USD appreciated against all developed market currencies aside from the Japanese yen, while the dollar’s gain against emerging markets currencies was even more dramatic.

The foundation’s portfolio navigated the volatility well with diversifying asset classes including flexible capital (hedge funds) and private equity mitigating some of the losses across the domestic equity segment in both the quarter and calendar year. The fixed-income segment was modestly positive in the quarter and modestly negative in the calendar year, helping in both periods to insulate the portfolio from equity market volatility.

The foundation’s portfolio is 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 only modest adjustments to the asset allocation and underlying managers when necessary.

For more information on the foundation’s investment performance and managers, please contact Interim Chief Financial Officer John Gillespie 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]

8.9% 10-year average annual return* / 5.3% 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.

SRI Pool Current Performance [PDF]

6.4% 7-year average annual return* / 5.3% 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

Income Pool Current Performance [PDF]

4.1% 10-year average annual return* / 2.1% 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]

0.2% 10-year average annual return* / 0.4% 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

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

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