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Investment Program
The Arkansas Community Foundation preserves and protects your investments and charitable intentions forever. The unique power of endowments means that as your gifts grow, they continue to benefit the community now and in the future. In order to accomplish this, the majority of ARCF's endowed funds are pooled together and invested for the long-term.
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Strategy: The Foundation incorporates the "prudent investment rule" in all of its investment considerations. ARCF's investment strategy seeks to preserve the value of the funds under management and to provide growth and income to support the charitable purposes for which the funds were created. This strategy is based on the Total Return concept, which allows investment managers to focus on maximum total return from capital appreciation, dividends and interest.
ARCF's Finance Committee, along with investment advisor Hammond Associates, develop investment objectives, policy and asset allocation, and select managers appropriate for each asset class. Manager performance is then closely monitored on an ongoing basis.
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Asset Allocation: ARCF has established a strategic asset allocation which seeks to diversify investments in order to achieve long term growth while minimizing risk:
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Policy Asset Allocation At-a-Glance |
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Total Growth Assets |
55% |
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Total Risk Reduction Assets |
25% |
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Total Inflation Protection Assets |
20% |
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Detailed Policy Asset Allocation |
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Growth Assets |
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U.S. Equity |
23% |
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International Equity |
22% |
| Private Equity |
10% |
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Total Growth Assets |
55% |
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Risk Reduction Assets |
| U.S. Fixed Income |
5% |
| Global Fixed Income |
5% |
| Absolute Return Funds |
15% |
| Total Risk Reduction Assets |
25% |
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Inflation Protection Assets |
| U.S. Inflation Protection Assets |
10% |
| Real Assets |
10% |
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Total Inflation Protection Assets |
20% |
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TOTAL ASSETS |
100% |
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Investment Consultant:
William R. Thatcher, CFA
Senior Consultant
Hammond Associates Institutional Fund Consultants, Inc.
www.hammondassociates.com
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Objective: The long-term investment objective is an annualized rate of return of 8.7% net of investment fees . This objective is comprised of the annual spending rate plus inflation, administrative costs and a growth factor.
Spending Rate Policy: The current spending rate policy provides an annual distribution of 5% of the fund's average market value of the previous twelve trailing quarters.
Performance: The chart below shows performance of our investments through December 31, 2007:
| Performance
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3 Mos |
1 Year |
3 Yrs |
5 Yrs |
10 Yrs |
| Total Fund Composite (net of investment fees) |
0.9% |
10.9% |
9.6% |
11.2% |
6.7% |
| Composite Policy Index |
-1.7% |
6.2% |
7.9% |
11.1% |
6.5% |
Other Relationships: In order to provide flexibility, the Arkansas Community Foundation has formed alliances with Merrill Lynch and with The American Funds Group. These alliances offer options to donors and allow individual brokers to maintain an on-going interest in the investment of assets donated by their clients.
In addition, the ARCF Investment Policy allows the use of Independent Investment Managers in certain instances. Please contact President and CEO Heather Larkin Eason at the Community Foundation for more information.
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