CapTrust recognizes the success
of any foundation or endowment is dependent
on the following four investment variables:
Our CapTrust Institutional Investors team offers a scope of services
that provide the means and guidance for our
foundation and endowment clients in an attempt to achieve
the maximum investment success possible. Our
services include the following, but are not limited
to:
Investment
policy development
The investment policy statement is perhaps the
most important single document responsible for
the ultimate success of a foundation or endowment.
Because foundations and endowments are characterized
by constantly rotating investment committees,
the absence of a well-defined investment policy
statement can play havoc with the consistency
required to produce favorable long-term results.
A well-written investment policy statement establishes
the framework for making investment decisions
by defining the range of permissible investment
activity. Once established, it helps prevent
a foundation or endowment from taking undue
or unacceptable risks. Lastly, it provides the
caretakers of the foundation or endowment with
a valuable tool to carry out their responsibilities
as a fiduciary. | > Back To
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Spending
policy development/evaluation and monitoring
The spending policy of a foundation or endowment
is a critical element to the overall success
of its investment plan. Establishing a spending
policy governed by payout requirements is key.
Our work in helping foundations and endowments
create an effective spending policy statement
begins with the core belief that assets should
meet both the current operational and philanthropic
needs of the non-profit while protecting the
future purchasing power of the non-profit's assets
at the same time. We also recognize the need
to balance the constant challenge of inflation
and its effects on maintaining the spending
policy in real terms. | > Back
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Asset
class research and analysis
Before choosing the right asset allocation strategy
for any foundation or endowment, it is necessary
to research and analyze asset class behavior.
Ongoing changes in the marketplace dictate that,
as your investment consultant, we constantly
monitor market trends as well as alternative
investment strategies. CapTrust’s foremost
objective in research is to uncover those ideas
and thoughts that can add value to each client’s
bottom line as well as provide a clear understanding
of their current behavior. | > Back
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Asset
allocation modeling and design
We believe asset allocation is the most important decision
our clients must make. CapTrust starts the asset
allocation decision process by working with
the board or the investment committee to define
the universe of acceptable investable asset
classes for the non-profit’s assets. We
then use comprehensive software that utilizes
optimization techniques to generate the return performance from each asset class, the
volatility of those returns and finally, the
correlation structure among the different asset classes.
The output this data creates is a pictorial
sketch of what is commonly referred to as the
“Efficient Frontier.” The Efficient
Frontier graphs a risk/return profile by identifying
the range of possible investment performance
outcomes given a specific blend of asset classes.
This modeling allows us to move on to the next
step, which is to develop the optimal asset
allocation strategy designed to meet the unique
needs of our foundation or endowment client. |
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Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns.
Develop
optimal asset allocation Strategy
As the asset allocation strategy is the most
important decision our foundation or endowment
clients make, CapTrust will spend considerable
time with each client analyzing the variety
of “what if” scenarios created by
the Efficient Frontier modeling. The board and/or
investment committee will receive a recommendation
for discussion of an acceptable asset allocation
range that will provide for reasonable investment
performance expectations across a wide variety
of scenarios. Once the optimal asset allocation strategy is
agreed upon and established, CapTrust will
review the client’s asset mix relative
to policy on a quarterly basis and recommend
changes if market conditions dictate. | >
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Investment
manager research and due diligence
CapTrust continually researches investment managers
using a computer database, as well
as other published databases, to screen over
2,500 institutional investment managers. We
screen based upon investment performance, risk
and style as well as a number of other quantitative
and qualitative factors. We use strict criteria
to create a short list of managers that will
then be used to begin our fundamental qualitative
work. We conduct dozens of in-person due diligence
meetings every year on managers who are currently
managing our clients' assets or who are under
consideration. In our investment manager research
process, we consider all management styles:
core, specialty, active, passive, and mixes
of these in client portfolios depending on a
client's objectives and preferences. | >
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Investment
manager search and selection
A typical manager search produces a list of
8 to 12 managers in the appropriate asset classifications.
After a discussion with the board/investment
committee about the relative strengths and weaknesses
(if any), we would move towards the development
of a short list (perhaps 2 or 3) in each category.
CapTrust would have direct conversations with
each of these finalist managers to consider
such things as fees, willingness to provide
on-site presentations (if required), current
position reports, and other information which
would add to the qualitative side of the analysis
of the final contenders.
We would then provide each member of the board/investment committee
with a complete report containing substantial comparative
information on each manager on the short list.
The final decision-making process by the board/investment
committee ensues and the finalists are selected.
Our clients can be assured all managers
have been carefully and thoroughly examined
before they are recommended. We feel our primary
job in the manager research area is to provide
the most cost-effective manner designed to achieve above-average
returns for an asset class. Our objective is
to identify managers who we expect will succeed in the
future, not just those who have done so in the
past. | > Back To Top
Investment
manager fee analysis and negotiation
CapTrust considers fee analysis and negotiation
on our clients' behalf to be one of our many
responsibilities. We review our clients'
fees for managers, custodians, and other parties
in order to ensure they are receiving the
best service possible with the most cost-effective
fee structure. | > Back To
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Quarterly
performance measurement and reporting to include
attribution analysis
We utilize our clients' custodian statements
for cash flow and asset value data. We enter
these values into our performance
software to calculate performance on a monthly or quarterly
basis, net of fees, unless otherwise instructed
by our client. Our sophisticated modeling tools
also help us determine the manager's true "alpha"
above and beyond asset class return. This comparison
allows us to determine if a manager is taking
excess risk (and achieving added value for the
risk).
Examples of additional attribution
analysis we provide includes:
Quarterly
meetings with Investment Committee or Board
of Directors to review adherence to investment
plan
Cap Trust provides each board or investment
committee member with a comprehensive performance
evaluation report at each quarterly meeting.
We are prepared to discuss any situation for
action involving the managed portfolios and
our recommendations that can range from targeted
asset allocation re-balancing, to adjusting
investment policy, to terminating an investment
manager, if appropriate. Our goal is to not
only review ongoing adherence to the stated
investment plan, but also provide measurable,
bottom-line value added through excellent client
service and communication. | > Back
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Annual
meeting to review Fiduciary and due diligence
aspects of investment plan
We will honor this responsibility by always
acting in the best interest of our clients.
To that end, we include in our annual meeting
with our non-profit clients a thorough fiduciary review and due diligence with respect to all
aspects of the investment plan. | > Back
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