Evanston Community Foundation

2011 Investment Results

We will recall 2011 as the first time in 18 years in which the portfolio's annual return (-0.28%) did not match up to at least two of our three primary investment return benchmarks. While ECF's portfolio outperformed the -2% median rate of return of our peer group in the Council on Foundations (an active index), the results fell short of ECF's spending target of 5.0% and of the blended benchmark (a passive index) return of 1.90%. The backdrop of a subpar domestic economic recovery, fiscal turmoil in Europe, and a slowing economy in China did not create the most favorable environment for equity investing in 2011. Broadly speaking, there was a much smaller range between the best and worst stocks in 2011 than in many years. The market, it seemed, did not discriminate much among individual stocks. They tended to move as one. That theme carried out to most other asset classes as well. Moves occurred in lockstep and were quite volatile, moving first up and then down (and vice versa) in sharp bursts of trading. It was, in short, a hard market in which to stand out. At the end of the year, our asset allocation remained within policy allocation ranges and broadly spread. The economic environment remains difficult as the global debt deleveraging process continues.

Our historical investment returns for the periods ending December 31, 2011 are as follows:

1 year -- -.3%
3 years -- 10.6%
5 years -- 3.4%
10 years -- 6.7%
24 years (since inception) -- 9.1%

2010 Investment Results

The Foundation portfolio earned 13% in 2010, well ahead of our spending policy target and outperforming our blended benchmark index. Much of the year's gain was achieved in the third and fourth quarters as the financial markets continued to churn in 2010, reflecting the continuing impact of the economic downturn. Our better relative investment results were the product of both better selection and allocation decisions. The portfolio remains broadly diversified, consistent with our overall investment guidelines and reflective of the cautionary stance the committee is taking.