Investment Management For Nonprofits

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We offer socially responsible investing *
Certified Women-Owned Small Business
* ESG (Environmental, Social and Governance) investments

Research and News behind our service

Here are some key concepts and trends that have driven the thinking behind our service.
We think you, your Board and Trustees will find the results interesting too!

Conflicts of Interest

The conflicts of interest in our industry are costly and generally don’t serve the fiduciaries.

Most of us in the institutional investment management business understand the biases and conflicts of interest that we have had to endure in the industry. Fewer, though, understand the magnitude and cost of the problem, and the increasingly loud calls for change to address those conflicts of interest.

The following academic research and news articles highlight the problem and the need for workable solutions

“Picking winners? Investment consultants' recommendations of fund managers”, Tim Jenkinson, Howard Jones, and Jose Vicente Martinez, Said Business School, University of Oxford, Journal of Finance, forthcoming.

“The Selection and Termination of Investment Management Firms by Plan Sponsors”, Amit Goyal and Sunil Wahal, Journal of Finance, August 2008

“Doubts Raised on Value of Investment Consultants to Pensions” by Andrew Ross Sorkin, New York Times, September 30, 2013

“Investment Consultants and Institutional Corruption “, Jay Youngdahl, Lab Fellow, Edmond J. Safra Center for Ethics, Harvard University , April 25, 2013

“North Carolina Pension's Secretive Alternative Investment Gamble: A Sole Fiduciary's Failed 'Experiment”, SEIU Local 2008 by Benchmark Financial Services, Inc., April 22, 2014

Asset Allocation

A sound asset allocation that is applied in a disciplined way is the biggest driver of returns and risks

“Determinants of Portfolio Performance” Brinson, Hood and Beebower, Financial Analyst Journal, January- February 1995

“Does Asset Allocation Policy Explain 40, 90, or 100 Percent of Performance?” Roger G. Ibbotson and Paul D. Kaplan, Financial Analysts Journal, 2000

Passive investments

Employing passive investments consistently outperforms employing actively managed or alternative investments. At this point, it is generally known that actively managed investments or hedge funds consistently underperform less risky passive strategies. But did you know that the difference can be up to 3-4% annually?

“Why Active Investing Is a Negative Sum Game “, Eugene F. Fama (University of Chicago Booth School of Business), Kenneth R. French (Tuck School of Business at Dartmouth College), June 3, 2009

“Nobel winner Fama: Active management 'never' good”, Lawrence Delevingne, CNBC, September 19, 2014

“Battle Royale: Active vs passive investing”, Jesse Solomon, CNN Money, December 7, 2014

“Measuring Chance - Luck versus skill in mutual fund performance”, Eugene F. Fama , University of Chicago Booth School of Business, May 2012.

“Luck Versus Skill in the Cross-Section of Mutual Fund Returns.” Eugene F. Fama and Kenneth R. French. Journal of Finance, October 2010.

Not All ETFs are the Same!

Not all passive investments are created equal - even for the same benchmark, so careful selection makes a big difference. Most investors think that all index funds and ETFs following the same benchmark are the same - after all they all follow the same group. In practice, they differ in returns, risk and the tax liabilities they create - up to 2%!

“Are Investors Rational? Choices Among Index Funds”, Edwin J. Elton, Martin J. Gruber, Jeffrey A. Busse, NYU Working Paper, October 2002

U.S. mutual funds, diBartolomeo and Witkowski (1997) find that almost 40% of all U.S. equity funds are misclassified. “Mutual Fund Misclassification: Evidence Based on Style Analysis”, Financial Analysts Journal, Vol. 53, No. 5 (Sep. - Oct., 1997)