Endowment Update. Presentation to: GLOBAL. PERSPECTIVE. DELIVERED. November 19, Sand Hill Global Advisors. All rights reserved.

Transcription

1 Endowment Update Presentation to: University Endowment Donors November 19, 2015 GLOBAL. PERSPECTIVE. DELIVERED.

2 Introduction to Sand Hill: Who We Are Mission Statement We are dedicated to providing exceptional wealth advisory services by forming partnerships with our clients built on trust, understanding, and thoughtful counsel. In the investment management business since Client assets total over $1.6 billion (as of May 31, 2015). Fiduciary approach focused on independent investment advice. Results-oriented philosophy executed through an insightful, team-based approach. Specialized focus on endowments and foundations. Employee-owned. 2

3 The Endowment Allocation Risk and Reward The University Foundation portfolio is built to support your mission into perpetuity. 3

4 Your Endowment Allocation Risk and Reward The University Foundation portfolio is built to support your mission into perpetuity. 4

5 SHGA Economic and Market Outlook SCENARIO POTENTIAL OUTCOME OPTIMISTIC 2015 V Shaped Economic Recovery: The global economy dramatically accelerates as the private sector ignites. The economy snaps back to above average 3 4% growth rates, driven by a surge in investment spending, inventory build up and a recovering consumer. The slack in the economy keeps inflation from picking up despite the growth surprise. Moderate Recovery: The global economic recovery finds firmer footing as we distance ourselves from the inconsistent growth patterns of the last several years. Growth remains positive despite waning policy support. However, the recovery posts modest 2 3% growth as deleveraging pressures and structural headwinds restrict economic potential. Equities and Risk Assets: Stocks outperform significantly on the back of strong earnings, accommodative policy and reasonable valuations. Fixed Income: Bonds struggle as deflationary assumptions do not play out and defensive fixed income assets become a source of capital. Equities and Risk Assets: Stocks post positive returns consistent with priorpost recessionary periods, interrupted by short lived consolidations. Fixed Income: Bond yields rise but not dramatically as modest growth and low inflationary pressure result in normalization following the end of quantitative easing. LES S LIKELY PE SSIMISTIC New Normal Environment: The global economy and markets continue to improve but at a glacial pace. An unprecedented degree of fiscal and monetary tightening restrains economic growth although the private sector perseveres. Continued consumer deleveraging and slow employment growth lead to 1 2% growth environment. Deflation/Double Dip Recession: Stimulus measures provide a temporary boost to demand but their reversal overwhelms the private sector. Tighter credit conditions, deleveraging and deflationary forces take the upper hand. Consumer and investment demand falls and dflti deflationary expectations ti rise, exacerbating the decline. Stagflation: Policy missteps lead to a combination of rising price levels and weak economic follow through. A weakening dollar drives commodity prices and imports generally higher, setting an inflationary process in motion. Inflation expectations become entrenched resulting in policy tightening in the face of declining demand. Equities and Risk Assets: Stocks post positive returns against a backdrop of higher than average volatility in a muddle through environment. Fixed Income: Bond yields remain lower for longer as investors continue to seek stability and capital preservation in an uncertain environment. Equities and Risk Assets: Stocks correct as economic growth slips into the negative column and corporate results are disappointing. Fixed Income: Bond yields make new lows and provide positive, if anemic, returns to investors. Calls of a bond market bubble fade. Equities and Risk Assets: Stocks suffer as falling revenues, a lack of pricing power and rising input costs depress profitability. Fixed Income: This scenario posed challenges to most financial assets, including bonds, which enter the period from vulnerable levels. MORE LIK KELY LESS LIKELY 5

6 A Year of Concerns Potential Sovereign Default Volatile Commodity Prices Geopolitical Concerns Pharmaceutical & Biotech Pricing Slowing Chinese Growth Tighter Monetary Policy Market Valuation VW Emission Standards Scandal 6

7 Growing Your Endowment Growth of Foundation Assets

8 Supporting the Mission Opportunity In addition to our work with the University entities we serve, we offer Sacramento State students opportunities for professional development. We provide market trading, research access and performance measurement services to the Student Investment Fund (SIF). Open to qualified students in the SIF, we offer a 12 week paid internship within our research team in our Palo Alto office. This internship experience allows each student to have first hand experience with market analysis, research report preparation and presentation, and meetings with the broader Sand Hill team. Ben Saleh (SR) 2015 Sacramento State intern. 8

9 Supporting the Mission Community Recognizing that community is at the heart of every mission, we are honored to support the University and its mission. It is our pleasure to support Sacramento State and its students at the Green & Gold Gala. Green & Gold Gala sponsorship proceeds provide funds for scholarships that make a difference in the lives of Sacramento State students. Sacramento State Sand Hill team and Herky 2015 Green & Gold Gala.. 9

10 THE MISSION OF SACRAMENTO STATE Transforming lives by preparing students for leadership, service, and success 10

11 Your Fiduciary Partner. 11