Investment Pools and Strategy

The current investment climate is characterized by a remarkable calm and low volatility in the face of problematic worldwide growth. Years of a zero interest rate policy on the part of central banks have led investors to bid up yield-oriented investments to the point where there is little margin for error. With respect to equities, yield-generating, slow but dependable growers are trading at significant premiums to other equities with potentially better growth prospects. In evaluating our portfolio, we are clearly aware that investment styles come in and out of favor and consequently take pains to ensure that our portfolio is truly diversified and not overly exposed to various factors such as the direction of future interest rates. Furthermore, in a low-return environment, costs become even more important on a relative basis. And we take pains to ensure that all higher cost investment strategies truly add value.

Preston L.C. Johnson
Investment Committee Chair and Board Member

For 100 years, the California Community Foundation has served as a trusted steward of the philanthropic dreams and resources of Los Angeles County residents. Our investment strategies are designed to support our donors’ charitable goals while serving the people of Los Angeles throughout the next century and in perpetuity. To that end, our efficient management and prudent investment strategies have created a diverse portfolio able to weather volatile market climates and focused on a longer time-horizon. The long-term fiscal stewardship of our donors’ funds and legacies is our highest priority. Under the leadership of our Investment Committee, and guided by strong economic principles, we designed five investment pools in order to meet our donors’ diverse needs – from short-term grantmaking to the creation of a permanent endowment.

CCF’s Charitable Asset Management Partnership (ChAMP) provides a customized investment solution by allowing donors whose funds meet certain criteria to recommend a registered investment advisor of their choosing to manage the assets of their Donor Advised Fund.

Endowment Pool Allocation

CCF’s Endowment Pool is invested over an indefinite time horizon, which allows it to take on a reasonable level of short-term volatility in order to achieve favorable long-term returns. Its equity fund portfolio seeks diversification through investments in U.S. equities, non-U.S. equities, alternative investments and other “opportunistic” investments, while the fixed income portfolio is diversified with respect to both industry sectors and issuers to minimize risk exposure.

Pools & Assets as of 8/31/16 (In Thousands)
Description
Objective

Endowment Pool

Investment Assets:
$867,782

Seeks to achieve long-term growth, preserving the purchasing power of assets over an indefinite time horizon and providing a relatively predictable, stable stream of distributions that keep pace with inflation over time.
Invested for long-term appreciation across multiple investments. Our Investment Committee, our long-term financial partner Cambridge Associates and many external investment managers oversee this pool.

Social Impact Endowment Pool

Investment Assets:
$14,118

Aims to achieve long-term growth over an indefinite time horizon, but also adds rigorous environmental, social and governance (ESG) analysis as an additional mandate.
Invested in a mutual fund with multiple social screens and a long-term objective. This pool is managed by PAX World Investments, a socially responsible investment manager.

Conservative Balanced Pool

Investment Assets:
$7,201

Offers diversified exposure to investment-grade fixed income with maturities from 1-5 years, and to the entire U.S. equity market for purposes of grantmaking over an intermediate horizon, generally 3-7 years.
Invested to seek moderate growth while providing the liquidity needed for grantmaking over the intermediate term. Management for this pool is provided by Vanguard.

Short Duration Bond Pool

Investment Assets:
$5,317

Offers diversified exposure to investment-grade fixed income with maturities from 1-5 years for purposes of distribution over a horizon of 1-4 years. Strives to provide liquidity as well as to potentially offer additional yield through a bond portfolio.
Invested in a bond mutual fund to offer liquidity and modest returns for near-term grantmaking. This pool is managed by Vanguard.

Capital Preservation Pool

Investment Assets:
$143,883

Endeavors to preserve principal, ensure liquidity and provide working funds for present and future needs through investment in high-quality, short-term fixed income and cash instruments.
Invested to meet the needs of funds with short-term objectives or goals. Structured to ensure maximum liquidity for grantmaking while also seeking to preserve principal. This pool is managed by our long-term partner City National Bank.

2015-2016 Annual Report