[by Shiela Steinman Wallace]
When the Jewish Federation of Louisville’s Endowment Investment Committee met with representatives of Northern Trust on February 7 to review the Jewish Foundation of Louisville’s finances, they had good news. As of December 31, the assets managed by Northern Trust and Republic Bank and Trust appreciated in excess of $1.4 million over the last year.
Investment Committee Chair Glenn Levine explained the Endowment has a policy benchmark, based on various investment indices, created under the Investment Policy Statement. It establishes expectations that the Jewish Foundation’s portfolio’s performance will achieve. The report given by Northern Trust indicates that the Jewish Foundation’s portfolio managers exceeded the benchmark by .5 percent in 2012 and are showing growth of 12.74 percent, net of fees.
“The portfolio has been doing what we want it to do,” Levine said, “and the Investment Committee is pleased.” The investments are showing a good, solid, consistent return with a fairly low risk and low volatility.
This style of management of the investment portfolio, he continued, ensures that during difficult times like the Great Recession of 2007-8, the Foundation’s investments don’t lose as much value as the majority of the market, and in good times, it will show a solid return but will not perform as spectacularly as those investors who take greater risk.
Part of the Jewish Foundation’s holdings consists of restricted funds – funds established by individuals or organizations that retain control of their use. These funds experienced the same excellent growth as the rest of the Foundation.
Levine reminded the owners of those funds, “Just because we earn 12 percent, it doesn’t mean we pay out 12 percent on the restricted funds.” Payouts are based on contractual agreements.
When the market was down, the fund holders got the contractual payouts even when the fund didn’t generate that much total return. Those payouts invaded the principal of the fund. When the investments are up, the fund holders still get the contractual payouts and the additional earnings increase the principal.
With the positive results, the Investment Committee is continuing its current path working with Northern Trust and Republic Bank.