Thought Leadership

Investment Strategy Overview: High Grade Core Intermediate

April 9, 2008

Small to medium sized foundations and not-for-profits have been under increasing pressure to generate strong investment returns to ensure they can achieve their missions.  Some of that pressure is caused by inflation in program costs, but it is also due to unusually low domestic interest rates over the past five years, and weak stock performance.  The total return of the S&P 500 over this decade through the end of March 2008, including dividends, has essentially been flat.  While the largest foundations and not-for-profits have chosen to diversify away from traditional asset classes both to enhance returns in this environment, and to better diversify their portfolios, smaller not-for-profits often do not have access to these choices.  Some have chosen not to pursue this path due to a variety of reasons including the liquidity and safety needs of the smaller foundation.  As a result, these smaller institutions have frequently emphasized fixed income to a greater extent than their larger brethren.