Investment Approach

We have developed an investment approach that we believe will help us to achieve our vision. We aim to preserve capital and maximise the funding available for granting, with the flexibility to respond to opportunities as they arise.

Our Investment Approach

Our strategic objectives for our investments are to:

  • ensure prudent management of the Foundation’s investment portfolio
  • maintain the real value of the capital of the Foundation in relation to inflation
  • ensure a stable level of grantmaking over time by maximising the total return that can be provided by the investments of the Foundation, subject to a prudent level of risk
  • to maintain fairness between present and future generations.


In pursuit of these objectives we will continue to seek international investment best practice by working with appropriately qualified investment advisers to develop and implement strategies designed to achieve our strategic objectives.

Prudent management of the investment portfolio means that risk will be managed conservatively and that over time spending will be controlled within policy guidelines and budgetary constraints.

Investment risk will be managed through the diversification of the investment portfolio across asset classes, fund managers, and geographical regions. The portfolio’s currency risk will be prudently managed.

The application of the spending rule will determine the maximum amount to be spent on the fulfilment of the annual granting programme and to meet current operating costs. However, spending will be constrained by budgetary requirements and the level of reserves held by the Foundation.

Financial markets are likely to remain volatile during the early years of the Strategic Planning period. This volatility could favourably or unfavourably impact on the Foundation’s income stream. Prudent management of the investment portfolio will ensure that the Plan’s objectives are met and vision achieved.

 

Investment strategy

The Foundation relies on investment returns to provide the administration and grants budgets each year, making investment performance critically important.

 

The Foundation’s Investment Committee continuously reviews and adopts global best practices in the oversight of the Foundation’s portfolio. 

Helping  make those decisions is Cambridge Associates, an international investment advisor to foundations and endowments including the Bill and Melinda Gates Foundation, the W.K. Kellogs Foundation and the universities of  Harvard, Princeton and Stanford.

With headquarters in Boston and offices around the world, Cambridge Associates became  the Foundation’s investment advisor in January 2010 and is providing the best strategies to maximise income, protect and future-proof assets and ensure a stable level of spending.

Asset allocation

The Foundation’s asset allocation policy is categorised under four broad asset groups, or asset buckets, according to the primary roles that each asset class plays in the portfolio:

  • Growth Assets: the Foundation’s growth engine, consisting of both listed and private equity
  • Diversification Assets: which reduce the volatility inherent in an equity-biased portfolio
  • Deflation-Hedging Assets: providing insurance against a prolonged economic contraction
  • Inflation-Hedging Assets: providing insurance from an unexpected spike in inflation.
     

Responsible Investment

Foundation North continues to be a signatory to the United Nation’s Principles for Responsible Investment (UNPRI).

As a responsible member of the world community the Foundation signed up to the UNPRI in 2008, adopting the principles as a way to demonstrate leadership by advancing universal principles and responsible corporate citizenship to make the global economy more sustainable and inclusive.

The Foundation believes that environmental, social and corporate governance (ESG) issues can affect the performance of investment portfolios. The UNPRI provides a common framework to assist investors in considering and integrating ESG issues into their investment processes.

Foundation North has agreed that, over time, it will apply the following principles:

  • Incorporate ESG issues into investment analysis and decision making processes.
  • Be active owners and incorporate ESG issues into its ownership policies and practices.
  • Seek appropriate disclosure on ESG issues by the entities in which it is invested.
  • Promote acceptance and implementation of the principles within the investment industry.
  • Work together with other signatories to enhance its effectiveness in implementing the principles.
  • Report on its activities and progress towards implementing the principles.
     

Statement of Investment Policies and Objectives

The Statement of Investment Policy and Objectives (SIPO) prepared by the Trustees of Foundation North  sets out the objectives, policies and beliefs governing decisions about investments in relation to the Foundation’s assets.

This SIPO takes account of the requirements of;

  • the Foundation Deed constituting the Foundation;
  • the Trustee Act 1956; and
  • the Community Trusts Act 1999.

Read the Foundation's full SIPO (PDF)

 

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