Investment Performance

Q2 2022 Investment Report
As of June 30, 2022

Allyson Tucker | Chief Executive Officer, Washington State Investment Board
Allyson Tucker, Trustee and Chair of Investment Committee

Thank you for choosing Seattle Foundation as your partner in philanthropy. We know that you share our commitment to creating a region of shared prosperity, belonging, and justice. We appreciate your confidence in us to manage your assets in service of a greater goal: fostering a community where everyone can thrive. We are pleased to share these results from Q2 and we welcome any questions or feedback.

Market Conditions
Global-equity markets sold off during the second quarter with the S&P 500, MSCI EAFE and MSCI Emerging indices posting declines of 16%, 14.5%, and 11.5%, respectively. Equities and bonds had their worst first half of the year since the 1970s as fears of high inflation and the economic impact of changing central bank policies caused a significant shift in investor preferences.

Recent declines also reflect the process of unwinding the excessive valuations of recent years and led to indiscriminate selling in certain segments of the market due to a preference for near-term cashflows over those further in the distance. As the markets adjust to the new economic environment and volatility abates, we expect market pricing to become more discerning, which should benefit highly skilled managers who display discipline and patience.

The Seattle Foundation pools were designed to be resilient in the long term as complexity provides an advantage to patient, disciplined investors with in-depth knowledge of the fortunes of individual companies. This plus the Foundation’s diversified strategy will likely be key contributors to overcoming what might at times be fierce headwinds from markets and the world at large.

Portfolios
The Balanced Pool is Seattle Foundation’s primary investment pool and is actively managed to deliver returns at 5% plus CPI over a long-term horizon. It maintains a diversified portfolio that includes exposure to global equity markets, alternative investments, and more conservative asset classes such as US Fixed Income. Over the last 10 years, the Balanced Pool has gained 7.6% per annum. The Balanced Pool lost 5.5% in the first quarter and registered a 3.7% gain in the last 12 months. The second quarter was a challenging one due primarily to a broad based and deep sell-off across public equity markets globally.

In addition to our Balanced Pool, we offer other investment options to meet our fundholders’ needs. Our Socially Responsible Pool, designed to meet ESG (Environmental, Social and Governance) requirements while also providing competitive economic returns, lost 11.3% for the quarter. Our Intermediate-Term Pool, designed to meet the expectations of donors with a grantmaking horizon in the two-to-seven-year range, lost 6.3%. The Foundation also manages a Short-Term pool for donors with very short grantmaking horizons. This pool is intended to preserve capital as best as possible; it was flat in the quarter. Lastly, the Foundation offers an Index pool, which is all passive, and a Growth Pool. These pools lost 11.6% and 12.0% in the quarter, respectively.

We are thankful for the opportunity to support you in creating powerful, rewarding philanthropy to make King County a stronger, more vibrant community for all. We welcome your questions and comments about Seattle Foundation.

Sincerely,

Allyson Tucker, Seattle Foundation Trustee and Chair of Investment Committee

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