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The Foundation Investment Team Talks Asset Allocation

At The San Diego Foundation, we are often asked about our investment strategies that have helped grant more than $930 million to nonprofit organizations improving the quality of life of San Diegans throughout the region.

With over $686 million in assets, and more than $400 million in endowment funds, the Board of Governors and its Investment Committee take sustained, financial growth very seriously to maximize returns and ultimately help grant more money with the purpose of improving the quality of life in San Diego.

The San Diego Foundation invests donated capital with a long term view in mind. We believe that by having a longer time horizon than the market, we are able to take advantage of undervalued asset classes across global capital markets.

These strong, calculated investment decisions help us pursue our mission of growing a more vibrant region.

Diving deeper into our methods, we believe it’s imperative to constantly review and analyze these investment strategies to improve our long-term return as much as possible. Oftentimes that can mean small tweaks to ensure a proper portfolio balance, or a more formal process to assess the future and address any necessary global, national or industry trends or impacts.

Formal Asset Allocation Review

The Foundation recently reviewed an asset allocation study for each of our investment categories (also known as “investment pools”), a significant step in the ongoing review of our portfolios.

Asset allocation studies are valuable because they examine the relationships of different types of investments (i.e. asset classes).

Using future assumptions and historical correlations, we are able to review the asset allocation of our portfolios and make changes as necessary, based upon our long term objectives. This year, only minimal changes were recommended to our asset allocation to ensure the most ideal risk and return balance.

Review Process

To reach these decisions, we first forecasted 10-year financial market assumptions. These assumptions are then entered into an optimizer tool which provides an analysis of various investment strategies, taking into account different risk, return, and correlation levels.

In addition, we look at risk contribution by various factors, scenario analyses, and stress testing to determine the best balance in each category.

Ultimately, the proposed change (and no change) put us and our donors in the best position to maintain growth and continue supporting the San Diego region through grantmaking.

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All investments of The Foundation are monitored by The Foundation Board of Governors Investment Committee. The committee is comprised of board members, as well as other community volunteers who have over 150 years of combined global and domestic investment expertise.

We continue to value and steward donors gifts and strive to seek the best long term risk adjusted returns based on time horizon and risk tolerance.

Visit our site to get the latest summaries on Endowment and Non-Endowment investment summaries.

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About Matt Fettig, CFA

Matt FettigAs Chief Investment Officer, Matt oversees and manages the investment strategies and activities of The San Diego Foundation. He works with the Investment Committee of the Board of Governors, senior staff, investment managers, auditors and outside consultants to develop investment strategies that maximize returns and help grant more money to local nonprofit organizations, helping to improve the quality of life in San Diego.

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