Recent Market Performance and CFA Funds

At the Community Foundation for the Alleghenies, we enter this period of market turbulence from a position of strength, having earned an average of 9.22% per year over the last decade and 16.41% per year over the last three years.

 

On the Current Investment Climate

A message to our fundholders

At the Community Foundation, we are particularly aware of the recent market performance. With this in mind, we asked Skip Cowen, President of Cornerstone Independent Asset Management, to provide us with some brief remarks regarding the current situation. Cornerstone serves as our Chief Investment Officer, and Skip directly oversees the individual fund managers in our portfolio.

Here is what he had to share:

“A lot has changed in the world over the last ninety days and I want to give you a brief update on the market climate and the issues that will impact investment performance over the next several months. The two geo-political events that have captured everyone’s attention are the war in Ukraine and China’s continued enforcement of their Zero Covid Policy. While both of these events would normally be short term distractions, they are creating complexity for the Central Bankers around the world who are tasked with fighting inflation and maintaining full employment. Russia’s invasion of a sovereign country has caused inflationary spikes in the cost of certain commodities, mainly oil and wheat, while China’s Covid driven lockdowns continue to pressure global supply chains. Both of these issues complicate the Federal Reserve’s desire to normalize interest rates, cool inflation and shrink the size of their balance sheet.

“The markets have done what they are supposed to do, which is reset prices in light of changing circumstances namely, higher interest rates and potentially lower global growth. This is normal market behavior and what we would expect markets that are functioning properly to do. That being said, it doesn’t make things easier for families or institutions that own financial assets. As of the writing of this commentary, the markets are mostly in correction territory and a case can be made that more uncertainty lies ahead. As of April 30th the S&P 500 is down 12.92%, the All Country World Index is down 12.94%, and the Bloomberg Aggregate Bond Index is off 9.50%. While these numbers have yet to reach ‘bear market’ territory, they do feel unusually painful because down equity markets are often accompanied by rising bond markets and that is not the case in 2022.

“During periods of volatility, investors often ask what they should be doing. The answer is usually very little. Anything you would do to protect the portfolio has to be done prior to the volatility, not in the middle of it. At the Community Foundation for the Alleghenies, we enter this period of market turbulence from a position of strength, having earned an average of 9.22% per year over the last decade and 16.41% per year over the last three years. We maintain a large overweight to US stocks relative to international equities and a bias toward value and quality. The duration of our bond portfolio is short to intermediate, and we hold a well diversified alternative sleeve with exposure to inflation-sensitive assets, including commodities, TIPS and real estate. Cornerstone Advisors Asset Management, LLC and the investment committee of the Board of Directors will continue to monitor global events, but feel we are properly positioned and prudently diversified to achieve our long term objectives.”

Please know we are very appreciative that you are part of the Community Foundation family and we take our responsibility in overseeing our combined assets with the utmost attention. As Skip says, we are here for the long term. Please do not hesitate to contact CFA Donor and Development Services Officer Katrina Perkosky or CFA President Mike Kane with any questions.