As Canada’s second-oldest and sixth-largest community foundation, responsible investing is essential to the long-term success of the bequests, funds, grants, and other financial vehicles administered by the Victoria Foundation.
To ensure these endowments will be available to people and organizations throughout Victoria annually and continuously, the Victoria Foundation must strike the right balance between growth and safety. This is done by working with established global professionals with oversight from an internal investment committee.
“The 60/40 portfolio — the balanced portfolio — has been the darling of the investment industry since the 1980s,” shared Ian Johnson, Director of Investments for the Victoria Foundation, “but by 2015, interest rates were near zero — or even negative in Europe and Japan — so the bond portion of your portfolio was not providing balance anymore. Therefore, the Foundation has been working to adjust the portfolio to align with the investment landscape as it evolves and changes.”
In most cases, the timeline for investors is relatively short: a young couple saving for a down payment on a home, a parent setting something aside for a child’s education, or an older couple growing their nest egg for retirement.
At the Victoria Foundation, the investment time horizon for the endowment portfolio is long term, and requires annual granting to support the community. In fact, during periods of economic downturn, the organizations that the Foundation serves are in greater need of support, which means it’s imperative that the principal component of each endowment be professionally managed to mitigate risk, maximize returns, and create impact.
Following substantial market growth and investments over the past decade, 2022 saw more turbulence as central banks raised interest rates to fight inflation. However, thanks to proactive planning, the Foundation is still in a strong position to support the community.
Advanced strategies, such as tail risk managers, help diversify across asset classes while implementing hedging strategies to allow for better performance during bear markets.
“We brought in a high-quality mortgage manager and world-class private equity infrastructure managers to provide growth without compromising stability. We added the infrastructure component to the portfolio, earning double-digit returns last year, which helped stabilize returns in a challenging period,” explained Johnson. “We also implemented tail risk managers, which are essentially insurance for your investment, to give us the stable returns we need through prosperous times and economic slowdowns.”
The Foundation continues building for the future and working with our professional managers. More information about our investing practices is available at Victoriafoundation.bc.ca.
For more detailed information, please visit our website to read Responsible Investing 2023: Victoria Foundation’s Approach.