Endowment & Foundation Management

Helping you balance short-term demands with long-term objectives

An investment advisory relationship to help you create lasting success

Our investment process begins with you and your organization. First, we spend time understanding your organization’s unique circumstances – including your mission, funding considerations, and spending needs – priorities, and short- and long-term risk and return goals. Then, we design an investment plan that seeks to meet your spending needs and preserve your portfolio’s long-term purchasing power.

Our approach to investing for endowments and foundations combines our bottom-up emphasis on capital preservation and growth with additional attention paid to outperforming in down markets. We augment our investment offering with additional solutions to enhance the management and operations of an institution so you can thrive.

 

Our executives are owner-operators who manage clients’ investments as if they were their own, because they are. This creates a unique investment culture and distinct alignment of interests with our clients. As an investor who has stewarded our own institution for over 200 years, our unique perspective can help you achieve your goals over long time horizons.

Solutions to help achieve your short- and long-term objectives

  • Investment Advisory

    Long-term, value-oriented investing focused on preserving and growing your capital

  • Spending Rate Analysis

    Guidance establishing the appropriate spending policy

  • Investment Policy Statement

    Advice on the creation or review of your investment policy statement 

  • Trust Services

    Trustee and executor services that provide continuity while easing administrative burden

  • Strategy, Operating, and Fundraising Advisory

    Objective advice to help you achieve your organization’s goals

  • Lending

    Flexible, secured lending to help you implement strategies to achieve your objectives1

Setting an Asset Allocation for Endowments and Foundations

BBH Partner Suzanne Brenner and Deputy Chief Investment Officer Ilene Spitzer discuss special considerations to take into account when setting an asset allocation for endowments and foundations.
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How We Construct Endowment and Foundation Portfolios

BBH’s policy portfolio for endowments and foundations combines our bottom-up emphasis on capital preservation and growth with additional attention paid to outperforming in down markets. The driving principles behind the portfolio are as follows:

This table shows our driving principles behind endowment and foundation portfolios, including an equity bias, adequate liquidity, prudent leverage, downside protection and active rebalancing.
Equity Bias
 Adequate Liquidity
 Prudent Leverage
 Risk Management Active Rebalancing
We view an equity bias as necessary to ensure spending needs can be met on an annual basis while preserving the portfolio’s purchasing power.
 We believe endowment and foundation portfolios must have adequate liquidity to ensure spending needs can be met.
 We do not believe that leverage is necessary to generate strong long-term returns; when used, we believe it should be modest. We believe strategies and assets that bear less correlation to the wider markets or behave in a countercyclical manner can add practical value to endowment and foundation portfolios.
 We believe that tax-exempt portfolios should be rebalanced to model when actual allocations are outside of target ranges.

BBH Partners and senior executives have deep experience creating financial solutions for tax-exempt organizations and acting in a fiduciary capacity as nonprofit board members, enabling us to best serve our endowment and foundation clients.
Justin Reed Partner and Chief Investment Officer

Understanding Your Investment Objectives and the Risk-Return Trade-off

Your organization’s purpose is twofold: providing stable support for operations while maintaining long-term purchasing power. This requires delicately balancing your risk and return goals. When establishing your organization’s portfolio, we begin by understanding the following in order to identify the appropriate equity and fixed income allocations:

Read Infographic Text Version

This image shows our approach to managing the risk-return tradeoff for endowments and foundations. We take the following factors into consideration:

  • Portfolio spending rate and methodology
  • Flexibility of annual spending
  • Return targets
  • Investment horizon
  • Liquidity needs (for lumpy capital spending)
  • Tolerance for illiquidity in pursuit of higher returns
  • Tolerance for portfolio drawdowns
  • Open or closed pool
  • Availability or access to other funds for spending (e.g., other income sources, credit line)

After looking at this we work with you to determine an acceptable trade-off between risk and expected returns and help you think through changes to strategic plans, spending rates or portfolio objectives that may address shortfall risk.

Sustainable Investing and ESG

We have found that many seek to incorporate their core values in their investment portfolio. Interested in our approach to sustainable investing and how we align your portfolio with your values?

Learn more here

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1 Borrowed funds cannot be used to purchase securities in the portfolio.

This communication is for informational purposes only.  The information herein has not been based on a consideration of any individual investor’s circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice.  Individuals should consult their personal tax, accounting and legal advisers regarding any potential investment or strategy.  Any views and opinions are subject to change at any time.

This material does not constitute an offer or solicitation in any jurisdiction where or to any person to whom it would be unauthorized to do so.

Investment Advisory Products and Services:

NOT FDIC INSURED   NO BANK GUARANTEE    MAY LOSE VALUE

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