IPA/GIFT FINANCE AND INVESTMENT DEEP DIVE DAY
INVESTMENT RFP PANEL
NOVEMBER 4, 2015
IPA/GIFT FINANCE AND INVESTMENT DEEP DIVE DAY
SERVICE PROVIDERS, CUSTODIANS, COMPENSATION
Types of Providers
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Brokerage Firms
Banks
Registered Investment Advisors
Mutual Fund Companies
Types of Service Models
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Non-Discretion
Limited Discretion
Full Discretion
Is OCIO an additional choice?
IPA/GIFT FINANCE AND INVESTMENT DEEP DIVE DAY
SERVICE PROVIDERS, CUSTODIANS, COMPENSATION
Types of Products
 Cash, Bonds, Stocks
 Mutual Funds, ETFs, Index Funds, Sub-Advised Funds
 Hedge Funds, Private Equity, Other Illiquid Investments
Custody of Funds
 Local/Regional
 National
 Third Party
IPA/GIFT FINANCE AND INVESTMENT DEEP DIVE DAY
SERVICE PROVIDERS, CUSTODIANS, COMPENSATION
Fees and Compensation
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Advice
Product
Transactions
Custody
Direct vs. Indirect
Research, Recommendations and Resources
 Get to know SEC FORMs ADV Part I and Part II
 Understand when conflicts of interest are present
 http://www.adviserinfo.sec.gov/IAPD/Content/Search/iapd_Se
arch.aspx
 brokercheck.finra.org
IPA/GIFT FINANCE AND INVESTMENT DEEP DIVE DAY
The foundation makes payouts for grants and administrative
fees from the earnings of the endowment funds each year. In
order for the endowed assets to grow, the net total return must
be enough for the annual payout needs plus inflation and real
growth over time.
4.0%
4.0%
4.5%
4.5%
5.0%
5.0% Payout % for grantmaking
1.0%
1.5%
1.0%
1.5%
1.0%
1.5% Administrative fees
5.0%
5.5%
5.5%
6.0%
6.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0% Inflation factor
0.5%
0.5%
0.5%
0.5%
0.5%
0.5% Real growth factor
7.5%
8.0%
8.0%
8.5%
8.5%
6.5%
9.0%
Total PAYOUT %
Ave. NET TOTAL RETURN desired
IPA/GIFT FINANCE AND INVESTMENT DEEP DIVE DAY
Actual Investment Performance and Desired Return
25.00%
17.60%
20.00%
15.00%
16.80%
12.70%
11.10%
7.70%
10.00%
5.00%
21.00%
20.20%
1.40%
9.70% 9.00%
7.00%
6.70%
13.50%
6.55%
0.77%
1.60%
4.60%
0.00%
-5.00%
-4.30%
-10.00%
-9.30%
-15.00%
-20.00%
Red Line = Desired return of 8.5% (2.0% admin fee + 4.0% target distribution rate
-25.00%
-23.70%
-30.00%
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Investment/spending policies use a trailing quarter average
Example 12 or 16 quarters
Levels out market fluctuations
Annual grant distributions are more consistent from year to year
IPA/GIFT FINANCE AND INVESTMENT DEEP DIVE DAY
RFP PANEL
William Jarvis
Facilitator
Executive Director
Commonfund Institute
william.jarvis@commonfund.org
Bill Barnes
Will Thorpe
President
Community Foundation of Madison
and Jefferson County
bill@cfmjc.org
Director of Business Development-Investment
Stewardship
The Mason Companies
wthorpe@masoncompanies.com
Cheryl Cooper
Barb Young
Vice President, Charitable Services
Fifth Third Bank
cheryl.cooper@53.com
President
Porter County Community Foundation
byoung@portercountyfoundation.org