Performance

Portfolio Performance versus Benchmark

Our policy portfolio benchmark is net net return of 5% plus CPI. We choose this benchmark to enable us to continue giving 5% annually on an inflation adjusted rate, thereby keeping the giving and investment capacity of the Foundation whole over time. Additionally, we evaluate each individual investment, including SMSIs, against an appropriate benchmark.

This chart shows portfolio performance relative to the benchmark depicting dollar growth per quarter on the left axis and relative size of SMSIs versus Other Investments according to a percentage scale on the right axis. The chart shows quarter over quarter performance starting in Q4 of 2004.

Portfolio Performance versus Benchmark

In 2005 and 2006, the performance, at times, lags slightly behind our policy benchmark. Over the last five quarters, however, our Foundation portfolio outperforms the benchmark - even with the increase in SMSIs.

In Q2, Q3, and Q4 of 2005, we have sizable investments in SMSIs, i.e., around 25% of the portfolio. These investments are mostly in negatively screened Socially Responsible Investments (see chart below). Towards the end of 2005, we phase out of Socially Responsible Investments that only use a negative screen. In Q1 of 2006 we make a purposeful shift of around 12% of our Foundation’s assets into Sustainability, Mission, and Social Component Investments. From 2005 to the end of 2007, SMSIs have grown from 12% to about 23%.

SMSI Breakdown

This chart shows the SMSI category breakdown as a percentage of the overall SMSI investments on a quarter by quarter basis since Q2 of 2005.

SMSI Breakdown

In 2005, we developed our SMSI strategy focusing on Sustainability, Mission, Program, and Social Component Investments. This strategy included phasing out Socially Responsible Investments that relied only on negative screening. Starting in 2006, we invested in Sustainability Investments and Mission Related Investments. Over the past one and a half years, our Social Component Investments have grown to one quarter of our overall SMSIs.

In summary, we are cautiously optimistic that the SMSI performance over the past two years is a leading indicator that SMSIs have the potential of providing competitive economic returns, while also maximizing the impact of the mission and programs of our Foundation.