2014-04 study on nonprofit investing (soni) results
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Thrive. Grow. Achieve.
The Study on Nonprofit Investing (SONI) Survey ResultsDennis Gogarty, CFP®, AIF®
Chase Deters, CFP®, ChFC®
Mark Murphy, CFA
Copyright Raffa Wealth Management, LLC All Rights Reserved
22nd Annual 2014 SONI Survey Results/ Page
DISCLAIMER
This presentation summarizes the results of an informal, non-scientific study compiled by analyzing the results of 261 surveys completed by nonprofit finance executives.
This presentation is for information purposes only. Participant responses have not been verified. Data analysis was performed by Raffa Wealth Management.
When stating “nonprofit” responses it should be noted that all responses are limited to the nonprofits that participated in the survey. No broader indications should be assumed.
32nd Annual 2014 SONI Survey Results/ Page
STUDY ON NONPROFIT INVESTING
Nonprofits plan every fiscal move with great caution, backed up with thorough analysis. Yet when it comes time to plan their investment policies and gauge their investment performance, they operate in a vacuum, without access to information about how similar organizations manage their reserves and perform on their investments.
The Study on Nonprofit Investing (SONI) is providing senior nonprofit finance executives with peer benchmarking data on investment policies and ROI. Raffa Wealth Management, LLC (RWM) has commissioned this annual study to help all nonprofits strengthen investment policies, gauge investment performance, and ultimately provide them with the tools they need to better serve their communities.
42nd Annual 2014 SONI Survey Results/ Page
INTRODUCTION
In February of this year 261 nonprofit finance executives completed a survey about their organization’s investment policies and results.
The survey was developed and distributed with the help of a third-party research provider (Visionary Marketing). Raffa Wealth Management has analyzed the results of the survey and is preparing the full SONI report for review.
*Other Includes: Educational, Religious, Cultural, & Community Development
Budget Of: Association Public CharityPrivate/Community
Foundation Other Overall$0-5M 44 41 16 30 131$5-25M 56 27 2 17 102$25+M 10 9 1 8 28Total 110 77 19 55 261
Second Annual
Study On Nonprofi
t Investing (SONI)
52nd Annual 2014 SONI Survey Results/ Page
AGENDA
Second Annual
Study On Nonprofi
t Investing (SONI)
• Budget and Reserve Balances
• Portfolio Investment Policy Review
• Portfolio Results & Analysis
• Key Takeaways and Custom Reports
62nd Annual 2014 SONI Survey Results/ Page
BUDGETS AND RESERVE BALANCES
How does the
budget size and type of
nonprofit impact where cash
assets are held?
What percentage of a nonprofit’s reserves is held in cash?
• For most nonprofits, the relative size of their operating cash reserves tend to decrease as their operating budget increases.
What percentage of a nonprofit’s reserves are held in a long term portfolio?
• Once operational cash reserves are funded, most nonprofits focus the majority of their investable assets in long term investment portfolios
Budget Of: Association Public CharityPrivate/Community
Foundation Other Overall$0-5M 22.2% 32.8% 23.7% 39.4% 29.8%$5-25M 18.4% 16.7% 51.4% 21.0% 18.9%$25+M 8.5% 22.1% 4.9% 11.4% 13.7%
Budget Of: Association Public CharityPrivate/Community
Foundation Other Overall$0-5M 46.7% 28.2% 44.7% 21.4% 34.5%$5-25M 49.0% 59.8% 10.0% 42.5% 50.5%$25+M 53.7% 57.6% 94.1% 50.6% 55.5%
72nd Annual 2014 SONI Survey Results/ Page
BUDGETS AND RESERVE BALANCES
What is the
average level of
investable assets with
respect to budget size?
What is the minimum target for reserves?
• Most of nonprofits participating in the survey target 4-6 months for their minimum level of reserves.
• Most of nonprofits participating in the survey held more in reserves than their minimum target.
Associations Public Charity Other45.5% 36.6% 37.5%23.4% 31.7% 41.7%22.1% 24.4% 12.5%9.1% 4.9% 8.3%
Operational Budget in Reserve4 - 6 Months in Reserve1 - 3 Months in Reserve
More than 1yr in Reserve7 - 12 Months in Reserve
82nd Annual 2014 SONI Survey Results/ Page
BUDGETS AND RESERVE BALANCES
How many nonprofits maintain a line of
credit for operation
al shortfalls?
How many nonprofits use a line of credit?
• Overall, 14.5% of the nonprofits who responded to the survey said they utilized a line of credit
• Of those, the average interest rate on the line of credit was 3.4%, with a high of 7.0% and a low of 1.0%
• Most nonprofits use their line of credit to pay expenses due to the timing of cash flows
• Those nonprofits who used a line of credit, tended to maintain lower cash reserves (21.2% of total reserves) than those who did not (24.7%)
Budget Of: Association Public CharityPrivate/Community
Foundation Other Overall$0-5M 7.0% 14.6% 16.7% 19.4% 13.8%$5-25M 12.7% 7.4% 0.0% 23.5% 13.1%$25+M 10.0% 33.3% 0.0% 12.5% 29.4%
92nd Annual 2014 SONI Survey Results/ Page
BUDGETS AND RESERVE BALANCES
Did more nonprofits add to, or withdrawa
l from their
investment reserves
during 2013?
What percent of nonprofits had cash flows to/from their investment reserves?
• Close to half added to reserves in 2013• Few nonprofit organizations needed to
withdraw money from their reserves
What percent of nonprofits have formal goals to contribute to their reserves?
• Most nonprofits only contributed to their reserves on an ad hoc basis, with no formal guideline
Association Public CharityPrivate/Community
Foundation Other OverallAdded 47.4% 34.9% 43.8% 31.8% 40.5%Withdrew 10.3% 22.2% 18.8% 4.5% 13.2%No Change 42.3% 42.9% 37.5% 63.6% 46.4%
Association Public CharityPrivate/Community
Foundation Other OverallGuideline 34.5% 22.1% 36.8% 18.2% 27.6%Ad-Hoc 46.4% 51.9% 36.8% 56.4% 49.4%
102nd Annual 2014 SONI Survey Results/ Page
AGENDA
Second Annual
Study On Nonprofi
t Investing (SONI)
• Budget and Reserve Balances
• Portfolio Investment Policy Review
• Portfolio Results & Analysis
• Key Takeaways and Custom Reports
112nd Annual 2014 SONI Survey Results/ Page
PORTFOLIO INVESTMENT POLICY
How many nonprofits maintain a
formal investmen
t policy and who is
given authority
over investmen
t decisions?
What is the percentage of nonprofits with Investment Policy Statements?
• The majority (~75%) of nonprofits maintain formal Investment Policy Statements to govern their reserves
Who maintains decision-making authority over the investments in the portfolio?
• Most nonprofits (53%) give their investment advisor discretionary authority to make investment changes within the guidelines of the IPS
Association Public CharityPrivate/Community
Foundation Other Overall
90 51 12 30 183
88.2% 67.1% 70.6% 62.5% 75.3%
Association Public CharityPrivate/Community
Foundation Other Overall60.0% 51.0% 58.3% 36.7% 53.6%38.9% 39.2% 25.0% 40.0% 38.3%1.1% 9.8% 16.7% 23.3% 8.2%
DiscretionaryNon-DiscretionaryDon't Know
Inv Adv Authority
122nd Annual 2014 SONI Survey Results/ Page
PORTFOLIO INVESTMENT POLICY
What nonprofits maintain
target asset
allocations and who
made changes?
How many organizations had formal asset allocation targets?
• The majority of associations have formal asset allocation targets, but barely half of the other nonprofit groups maintain these targets
How many organizations changed their asset allocation targets?
• Nearly 30% (23/79) of those Associations with formal asset allocation targets chose to make adjustments to their policy last year
Association Public CharityPrivate/Community
Foundation Other OverallCount 79 41 10 20 150Percentage 71.8% 53.2% 52.6% 36.4% 57.5%
Association Public CharityPrivate/Community
Foundation Other Overall23 17 3 7 50
21.7% 11.8% 33.3% 28.6% 20.0%39.1% 23.5% 33.3% 28.6% 32.0%26.1% 29.4% 28.6% 26.0%8.7% 17.6% 14.3% 12.0%8.7% 33.3% 6.0%
Made a ChangeMore ConservativeMore AggressiveNew CategoryIncreased AltsDecreased Alts
132nd Annual 2014 SONI Survey Results/ Page
PORTFOLIO INVESTMENT POLICY
How does the
reserve size of a nonprofit
impact the target asset
allocation of their
long term reserve?
How do nonprofits with a $0-5M reserve structure their Long Term portfolio?
How do nonprofits with a $5-25M reserve structure their Long Term portfolio?
How do nonprofits with a $25+M reserve structure their Long Term portfolio?
Association Public CharityPrivate/Community
Foundation Other Overall21 12 3 7 43
14.5% 20.0% 41.7% 19.6% 18.8%33.0% 23.7% 9.3% 35.4% 29.1%38.6% 37.4% 16.3% 33.6% 35.9%5.9% 12.9% 9.0% 6.4% 8.2%3.2% 6.0% 11.7% 0.7% 4.2%
International Alternatives
Reseve of $0-5M# of LT ReservesCashBondUS Equity
Association Public CharityPrivate/Community
Foundation Other Overall48 18 2 10 78
6.9% 4.0% 5.0% 4.5% 5.9%35.6% 34.4% 10.0% 36.5% 34.8%38.5% 38.6% 32.5% 41.0% 38.7%9.2% 12.9% 52.5% 7.0% 10.9%5.1% 4.0% 0.0% 1.0% 4.2%
Reserve of $5-25M# of LT ReservesCashBondUS EquityInternational Alternatives
Association Public CharityPrivate/Community
Foundation Other Overall9 11 5 2 27
1.6% 2.3% 2.8% 0.0% 1.9%31.9% 24.4% 21.2% 25.0% 25.4%38.9% 32.6% 28.0% 60.0% 34.6%15.9% 16.7% 10.2% 7.5% 14.0%11.7% 20.3% 16.0% 7.5% 15.1%
Reserve of $25+M# of LT ReservesCashBondUS EquityInternational Alternatives
142nd Annual 2014 SONI Survey Results/ Page
PORTFOLIO INVESTMENT POLICY
How does the
reserve size of a nonprofit
impact the target asset
allocation of their
long term reserve?
How do Associations structure their Long Term portfolio?
• Smaller associations maintain a more conservative portfolio
• Larger associations have a greater allocation to alternatives
Cash/Bond US/Intl Equity Alternatives47.5% 44.5% 3.2%42.5% 47.7% 5.1%33.4% 54.9% 11.7%
AssociationsReserve of $0-5MReserve of $5-25MReserve of $25M+
152nd Annual 2014 SONI Survey Results/ Page
PORTFOLIO INVESTMENT POLICY
What nonprofits included
allocations to
alternatives in their target
allocations?
How many organizations held alternative investments?
• 45% of organizations with a target asset allocation held alternative investments
• Associations were the least likely to include alternative investments in their target allocation
• Those with larger reserves were more likely to include allocations to alternatives
Reserve Of: Association Public CharityPrivate/Community
Foundation Other Overall# Responses 78 41 10 20 149$0-5M 19.0% 50.0% 33.3% 14.3% 30.2%$5-25M 47.9% 44.4% 0.0% 10.0% 41.0%$25+M 77.8% 100.0% 80.0% 33.3% 82.1%Overall 43.6% 61.0% 60.0% 15.0% 45.6%
162nd Annual 2014 SONI Survey Results/ Page
PORTFOLIO INVESTMENT POLICY
What kind of
alternative investments are being
used?
What kind of alternative investments did organizations use?
• Real Estate most commonly held alternative• Allocations to Private Equity/Venture Capital
and Hedge Funds increase with Long Term Reserve size
• Commodities and Precious metal holdings decrease as portfolio size increases
• Given the 2013 return for Commodities, Hedge funds, precious metals, and REIT’s. Holding alternatives did not likely add value in 2013.
Reserve Of: Commodity Hedge FundPrivate Equity / Venture Capital
Precious Metals Real Estate
$0-5M 69.2% 15.4% 7.7% 30.8% 84.6%$5-25M 18.8% 12.5% 3.1% 12.5% 43.8%$25+M 8.7% 47.8% 30.4% 4.3% 26.1%Overall 42.6% 45.6% 23.5% 19.1% 69.1%
172nd Annual 2014 SONI Survey Results/ Page
PORTFOLIO INVESTMENT POLICY
Who’s responsible
for ensuring that the
investments comply with the
IPS?
Who has the responsibility to review compliance with the IPS?
• Finance Committees are the most likely to have responsibility to review that the reserves are in compliance with the investment policy
• Associations give responsibility to internal staff members to ensure compliance with their policy, more so than any other organization type
Association Public CharityPrivate/Community
Foundation Other Overall33.0% 14.3% 8.3% 3.4% 20.9%6.8% 12.2% 8.3% 31.0% 12.4%
54.5% 69.4% 75.0% 62.1% 61.6%5.7% 4.1% 8.3% 3.4% 5.1%
IPS ReviewerStaff Member(s)Board of DirectorsFinance Comm.Investment Advisor
182nd Annual 2014 SONI Survey Results/ Page
PORTFOLIO INVESTMENT POLICY
How often
should your IPS
be reviewed
?
How frequently is the Investment Policy Statement reviewed?
• IPS is most commonly reviewed on an annual basis (60%-77%)
• Reviewing on an as needed basis is the second most common response (10% - 20%)
Association Public CharityPrivate/Community
Foundation Other Overall14.6% 23.5% 8.3% 17.2% 17.1%77.5% 62.7% 75.0% 58.6% 70.2%7.9% 11.8% 8.3% 24.1% 11.6%
2.0% 8.3% 1.1%
IPS Review DateAs NeededWithin 1 Yr
I don't know2 Yrs or Less Often
192nd Annual 2014 SONI Survey Results/ Page
PORTFOLIO INVESTMENT POLICY
What do nonprofits include in
their investment
policy statements?
In the IPS, what topics are addressed most frequently?
• Additional Suggestions for IPS Categories– Performance Benchmarks - Conflict of Interest– Definition of Risk - Spending Policy– Cost of Funds/Management - Portfolio Goals & Objectives– Performance Accountability - Fiduciary Status
• Permitted and prohibited investments, and the target investment allocations were the top three items addressed
• Fewer than half of policies address selection/termination guidelines of investment advisors
• Very few policies included SRI restrictions
Percentage87.7%78.2%68.2%61.5%60.9%54.7%49.2%28.5%21.2%
Target Allocation PercentagesPermitted Investments
Prohibited Investments
Socially Responsible Mandate
Diversification Requirements
Items Reviewed in Investment Policy
Selection of Investment AdvisorsTermination of Investment Advisors
Financial Advisor DiscretionInternal Staff Roles/Responsibilties
202nd Annual 2014 SONI Survey Results/ Page
AGENDA
Second Annual
Study On Nonprofi
t Investing (SONI)
• Budget and Reserve Balances
• Portfolio Investment Policy Review
• Portfolio Results & Analysis
• Key Takeaways and Custom Reports
212nd Annual 2014 SONI Survey Results/ Page
PORTFOLIO RESULTS & ANALYSIS
How does the
reserve size of a nonprofit impact their
bottom line
results?
What was the reported performance of the long term reserve in 2013?
• Associations with a smaller portfolio balance tended to have a lower rate of return, likely due to their more conservative asset allocation.
• As Public Charities grow in size, they tend to reallocate more of their cash to alternative investments. This did not provide a significant improvement in their investment returns in 2013.
Reserve Of: Association Public CharityPrivate/Community
Foundation Other Overall$0-5M 7.9% 8.6% 11.7% 10.5% 8.7%$5-25M 13.4% 12.4% 10.0% 13.4% 13.1%$25+M 14.9% 12.0% 12.1% 12.0% 12.9%Overall 11.8% 10.8% 11.5% 12.0%
Total United States Stock Market
Russell 1000 Index: top 1000
largest US publicly traded companies
Russell 2000 Index: remaining 2000 mid-sized and small US publicly traded
companies
S&P 500: top 500 largest US publicly traded companies
Value Stocks Growth Stocks
Russell 3000 Index: materially all publicly traded
US companies
Russell 1000 Index:
Russell 2000 Index:
For Illustration purposes only. Indices are not available for direct investment and performance does not reflect expenses of an actual portfolio. Past performance is not a guarantee of future results.
Total International Stock Market
Large International Developed Country
Stocks
Stocks from Emerging Market
Countries
MSCI All World ExUS Index
MSCI EAFE Index
MSCI Emerging Markets
Index
For Illustration purposes only. Indices are not available for direct investment and performance does not reflect expenses of an actual portfolio. Past performance is not a guarantee of future results.
Other: South America & Canada
Total US Bond Market
BarCap 1-5yr Gov/Credit Index:
Avg Duration ~ 2.7yrs
BarCap Long Term Gov/Credit Index:
Avg Duration ~ 14.2yrs
BarCap Aggregate Bond
Market Index: Avg Duration ~
5yrs
BarCap 1-5yr
Gov/Credit Index: Avg ~
2.7yrs
BarCap Long Term Gov/Credit
Index: Avg ~
14.2yrs
For Illustration purposes only. Indices are not available for direct investment and performance does not reflect expenses of an actual portfolio. Past performance is not a guarantee of future results.
BarCap 5-10yr Gov/Credit
Index: Avg ~ 6.5yrs
BarCap 5-10yr Gov/Credit Index:
Avg Duration ~ 6.5yrs
BarCap US Credit Index:Avg Duration ~ 6.8yrs
BarCap US Treas Index:Avg Duration ~ 6yrs
US Government, Agency &
Treasury Bonds
US Corporate & Mortgage Backed
Bonds
252nd Annual 2014 SONI Survey Results/ Page
2013 INDEX RISK AND RETURN
For Illustration purposes only. Indices are not available for direct investment and performance does not reflect expenses of an actual portfolio. Past performance is not a guarantee of future results.
Risk
Return
Fixed income
International stocks
US Stocks
Second Annual
Study On Nonprofi
t Investing (SONI)
262nd Annual 2014 SONI Survey Results/ Page
2013 PORTFOLIO BENCHMARK INDEX RISK AND RETURN
For Illustration purposes only. Indices are not available for direct investment and performance does not reflect expenses of an actual portfolio. Past performance is not a guarantee of future results.
Second Annual
Study On Nonprofi
t Investing (SONI)
272nd Annual 2014 SONI Survey Results/ Page
PORTFOLIO RESULTS & ANALYSIS
How do the investment
results compare to a blended portfolio
benchmark?
What was the performance of a sample blended portfolio benchmark in 2013?
Representative, sample portfolio benchmarks are intended to give context to performance results. The benchmarks were selected because we believe they are the broadest index available in each broad category (US stock, Intl stock, Bond, and Cash). They may or may not be suitable benchmarks for comparison to any particular investor’s portfolio or for the average results reflected in this study.
2013 Return 30/70 40/60 50/50 60/40 70/30
33.55% 20% 29% 38% 47% 56%15.29% 10% 11% 12% 13% 14%-2.02% 65% 55% 45% 35% 25%0.02% 5% 5% 5% 5% 5%8.72% 0% 0% 0% 0% 0%
Traditional Market Benchmarks
Blended Portfolio Sample Benchmarks
Russell 3000
1Month US T-Bills
HFRI Fund-of-Funds
MSCI AW ExUS
BarCap Agg Bond
For Illustration purposes only. Indices are not available for direct investment and performance does not reflect expenses of an actual portfolio. Past performance is not a guarantee of future results.
282nd Annual 2014 SONI Survey Results/ Page
PORTFOLIO RESULTS & ANALYSIS
How were the
investment results
relative to a blended
benchmark?
What was the performance of a sample blended portfolio benchmark in 2013?
•On an absolute basis, performance in 2013 was very strong
•Relative to a sample benchmark, performance lagged significantly as nonprofits increased exposure to equities
2013 Return
6.93%10.30%13.68%17.05%20.42%
Traditional 40/60 Portfolio BenchmarkTraditional 50/50 Portfolio BenchmarkTraditional 60/40 Portfolio BenchmarkTraditional 70/30 Portfolio Benchmark
Blended Benchmark Portfolio (Stock/Bond)*
Traditional 30/70 Portfolio Benchmark
*Indexes do not reflect the fees associated with actual investments and such fees would reduce the performance illustrated. Past performance is not an indication of future results and any investment can lose value.
# Portfolios Avg Return +/- Index9 8.59% 1.66%9 10.58% 0.28%
26 11.08% -2.60%20 12.00% -5.05%29 13.66% -6.76%
2013 Results
Growth 70/30 Portfolio (60-70% Stock)
Nonprofit Investment AllocationConservative 30/70 Portfolio (20-30% Stock)Mod Conservative 40/60 Portfolio (30-40% Stock)Balanced 50/50 Portfolio (40-50% Stock)Moderate Growth 60/40 Portfolio (50-60% Stock)
For Illustration purposes only. Indices are not available for direct investment and performance does not reflect expenses of an actual portfolio. Past performance is not a guarantee of future results.
292nd Annual 2014 SONI Survey Results/ Page
PORTFOLIO RESULTS & ANALYSIS
What level of under -
performance is
acceptable?
What level of underperformance is acceptable?
•Most nonprofits (45%) believe that over a 5 year time frame, advisors and managers should be expected to outperform their market benchmark net of all fees
•A surprisingly large number (23%) of nonprofits “didn’t know” what level of underperformance was acceptable.
33 16%
12 6%
I don't know 46 23%
45%
Advisors are expected to outperform gross of their fee, but underperformance up to the amount of their fee is reasonableAfter considering all fees, trailing benchmarks by 0.5% - 2.0% is reasonablePerformance should be measured in absolute terms (for example CPI + 5%)
10%20
Given a 5yrs, advisors are expected to outperform market benchmarks net of all fees
90
For Illustration purposes only. Indices are not available for direct investment and performance does not reflect expenses of an actual portfolio. Past performance is not a guarantee of future results.
302nd Annual 2014 SONI Survey Results/ Page
PORTFOLIO RESULTS & ANALYSIS
How much do
nonprofits pay their advisors and fund
managers?
How much do you pay your investment advisor and fund managers?
•As the investment balance increases, most nonprofits tend to be able to reduce their fees
How many “don’t know” how much they pay their advisors and fund managers?
•The majority of responses “don’t know” their fees•As reserve balances grow, fewer associations are unaware of how much their advisors are being paid
Reserves Of: Association Public Charity# Responses 46 25$0-5M 1.45% 1.01%$5-25M 1.13% 0.82%$25+M 1.02% 0.99%
Reserves Of: Association Public Charity# Responses 63 52$0-5M 70% 81%$5-25M 50% 48%$25+M 45% 36%Overall 58% 66%
For Illustration purposes only. Indices are not available for direct investment and performance does not reflect expenses of an actual portfolio. Past performance is not a guarantee of future results.
312nd Annual 2014 SONI Survey Results/ Page
PORTFOLIO RESULTS & ANALYSIS
How do portfolio expenses impact bottom
line portfolio results?
Does knowing how much you pay impact overall portfolio performance?
*t(150) = -1.96, p=0.078
•Portfolio results are significantly lower for those who do not know their investment expenses
How does paying higher fees impact investment returns?
•Overall, as portfolio expenses increased, average returns decreased.
Average Return12.20%9.98%
Fees are KnownFees are Not Known
# Responses Average Return35 12.54%40 12.10%17 11.56%
Annual Fee: 0.00% - 0.75%Annual Fee: 0.76% - 1.50%Annual Fee: 1.50% +For Illustration
purposes only. Indices are not available for direct investment and performance does not reflect expenses of an actual portfolio. Past performance is not a guarantee of future results.
322nd Annual 2014 SONI Survey Results/ Page
PORTFOLIO RESULTS & ANALYSIS
How do portfolio expenses impact bottom
line portfolio results?
How does the impact of not knowing fees change as asset allocations change?
•Portfolio results decline substantially when portfolio expenses are unknown
Fees are Known"Don't Know"
Fees Difference11.69% 8.40% -3.29%12.44% 10.90% -1.54%15.36% 10.57% -4.79%
Portfolio AllocationBalanced (50/50) PortfolioMod Growth (60/40) PortfolioGrowth (70/30) Portfolio
For Illustration purposes only. Indices are not available for direct investment and performance does not reflect expenses of an actual portfolio. Past performance is not a guarantee of future results.
332nd Annual 2014 SONI Survey Results/ Page
PORTFOLIO RESULTS & ANALYSIS
How do portfolio expenses impact bottom
line portfolio results?
How does giving discretion to an investment advisor impact performance?
•Overall, giving discretion to your financial advisor only slightly improves bottom line results, but not significantly
How does having an SRI mandate impact performance?
•Approximately 21% of those who had formal investment policy guidelines also had a socially responsible mandate
•Those who had a SRI mandate experienced lower returns than those without the restriction
Average Return11.51%11.45%
DiscretionNon-Discretion
Average Return # Responses12.64% 14210.14% 38
No SRI RestrictionSRI Mandate
For Illustration purposes only. Indices are not available for direct investment and performance does not reflect expenses of an actual portfolio. Past performance is not a guarantee of future results.
342nd Annual 2014 SONI Survey Results/ Page
PORTFOLIO RESULTS & ANALYSIS
How does having a formal
investment policy impact
portfolio results?
How does having a formal invest policy impact performance?
*t(148) = 4.92, p < 0.01
•Overall, organizations who have formal investment policy targets had significantly higher returns
Does changing asset allocation targets impact performance?
*t(121) = 2.44, p < 0.05
•Overall, organizations who stuck to their original asset allocation targets had significantly higher performance results
Average Return12.74%6.34%No Formal Targets
Have Formal Allocation Targets
Average Return13.79%10.99%Making Change to Target
No Change to Target
For Illustration purposes only. Indices are not available for direct investment and performance does not reflect expenses of an actual portfolio. Past performance is not a guarantee of future results.
352nd Annual 2014 SONI Survey Results/ Page
AGENDA
Second Annual
Study On Nonprofi
t Investing (SONI)
• Budget and Reserve Balances
• Portfolio Investment Policy Review
• Portfolio Results & Analysis
• Key Takeaways and Custom Reports
362nd Annual 2014 SONI Survey Results/ Page
KEY TAKEAWAYS
Keeping it Simple in 2013 helped respondents perform better.
1. Great absolute returns in 2013 and more respondents added to reserves than withdrew.
2. Close to half of the nonprofits participating held close to 50% of their cash assets in long term investments.
3. Half of the respondents give discretion to advisors to operate within the guidelines of the IPS.
4. The majority of associations have formal IPS’s with asset allocation targets. Having a policy with asset allocation targets, and not making changes to them, improved ROI in 2013.
5. The larger the organization and the more aggressive the asset allocation policy, the better the performance results in 2013.
For Illustration purposes only. Indices are not available for direct investment and performance does not reflect expenses of an actual portfolio. Past performance is not a guarantee of future results.
372nd Annual 2014 SONI Survey Results/ Page
KEY TAKEAWAYS
Keeping it Simple in 2013 helped respondents perform better.
6. Allocating to alternative assets likely detracted from performance results in 2013.
7. In relation to traditional broad market stock and bond benchmarks, participant returns trailed significantly.
8. The lower the fees, the better the results. In part because larger portfolios were more aggressively invested and less expensive.
9. Not knowing fees (more than 50% of respondents) correlated with lower results.
10. Portfolios with more US equity (particularly small cap), less emerging market and alternative investment exposure, and shorter term/corporate bonds performed best.
For Illustration purposes only. Indices are not available for direct investment and performance does not reflect expenses of an actual portfolio. Past performance is not a guarantee of future results.
382nd Annual 2014 SONI Survey Results/ Page
CONCLUSION
Thank you for attending!
Custom SONI reports can be created to compare your organization’s policy and results to your peer group for a flat fee.
We can’t thank you enough for participating and we strongly encourage you to participate again next year.
For more information:
• Visit www.npinvesting.org
• Or email info@raffawealth.com
392nd Annual 2014 SONI Survey Results/ Page
DISCLOSURE
This information was gathered from reliable sources but we cannot guarantee accuracy. Any performance related information is based on participant responses and have not been verified. Past performance is not an indication of future results and any investment can lose value.
Performance results have been compared to balanced benchmark portfolios comprised of broad market indexes. The benchmarks were selected because we feel they are the broadest market benchmark available in each broad category. They may or may not be suitable benchmarks for comparison to any particular investor’s portfolio or for the average results reflected in this study. You should consult with your investment professional to determine suitable benchmarks for your portfolio.
Indexes do not reflect the fees associated with actual investments and such fees would reduce the performance illustrated.
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