Berkshire Taconic Community Foundation's Managed Pool portfolio declined 5.1% in the third quarter of 2015, bringing the year to date performance down 2.4%. Notwithstanding, since inception in August 1999 the portfolio has generated an annualized return of 6.2%, outperforming a traditional global blend of assets (65% MSCI AC World Index/35% Barclays Global Aggregate Index) by 2% with substantially less volatility. Its ten-year average annualized return has outperformed the policy benchmark by a full 1%.
Strong relative performance from the foundation's investment managers helped to offset a general decline in global equities for the most recent quarter, and as a result, the portfolio outperformed its benchmark Index by .40%. However, the weight to domestic equities in a period that experienced a general market correction prevented higher gains from the non-U.S. (developed and emerging equity) and private equity segments of the portfolio. The foundation's flexible capital portfolio experienced minimal losses and remains positive (0.7%) for the year, with all managers outpacing their respective HRFI benchmarks. The fixed income segment of the portfolio contracted 1.4% and somewhat below the Barclays Capital U.S. Aggregate Bond Index, which increased 1.2% during the quarter.
The foundation's portfolio has been built for a variety of market conditions in an effort to generate long-term performance in excess of inflation and grantmaking needs, with a high degree of diversification. While mindful of the market environment, the investment committee remains committed to the long-term, strategic management performance goals, making only modest adjustments to the asset allocation and replacing non-performing managers when necessary.
*Portfolio assets were $106.6 million at September 30, 2015, and the portfolio distribution was 58.2% global public equity, 6.8% global private equity, 24.7% flexible capital, 1.2% inflation hedging, 7.7% global fixed income, and 1.4% liquid capital. During the quarter, the foundation increased its investments in the Causeway Global Value Fund, Highclere International Smaller Companies Fund, and the Dodge & Cox International Stock Fund, and made a new commitment to the Warburg Pincus Private Equity Fund XII.
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