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A Letter from our CIO and Treasurer 2019

The purpose of our investment portfolio is to provide the financial resources to fulfill our vision of a California where all low-income workers have the power to advance economically. Fortunately, our long-term returns have allowed us to grow our grantmaking capacity over time and our endowment finished 2019 at a record $2.5 billion. As a result of strong historical investment results, Irvine’s annual grants budget increased from $86 million in 2016 to $106 million in 2020. This growth in grantmaking resources is an important element in supporting the Foundation’s impact.

Our investment team is fully staffed as we enter 2020. We added a new Investment Director in January 2019 and a second Investment Associate in June 2019. With the team fully in place, we are focused on living our Investment Principles, which are the foundation to operating as a high-performance team.

Irvine’s Investment Principles

  • We are a long-term investor
  • We believe that relationships matter
  • We value independent thinking
  • We are a conviction-based investor
  • We are a flexible and nimble partner
  • We are intellectually curious
  • We align Irvine’s interests with the interests of our partners

Irvine’s Portfolio Results

Partnering with top investment managers helps Irvine to continuously evolve our investment strategies. Like many endowments and foundations, Irvine’s investment portfolio has a significant exposure to equity securities, both public and private. This includes a meaningful exposure to venture capital. While we have benefited from this positioning long-term, we are pleased that in 2019 the process began for Irvine to receive liquidity on some of our biggest venture capital successes. We hope this will continue during 2020. As a long-term investor, it is important to measure performance over long time periods, especially when the portfolio has a significant amount of private investments. The Foundation has been rewarded as a long-term investor, generating more than an 11 percent portfolio return over the past 10 years. Two key contributors drove Irvine’s long-term returns: superior manager selection and an overweight to quality private investments. Irvine’s disciplined approach to portfolio construction, with a focus on conviction-based investing, allows Irvine’s portfolio to generate strong long-term returns.

We also took an opportunity to look at our portfolio through a different lens in 2019 and examined the diversity of our managers. We focused on senior positions that have real economic representation within a firm, and we excluded support positions such as the CFO, general counsel, head of human capital, etc. that are already commonly filled by women. Our desire is to have a more realistic representation within the most highly compensated positions. Of our top 25 managers, which account for 82 percent of our assets, about one-third have more than half of their senior professionals represented by women or people of color (Black, Latinx, or Asian). Another one-third have 25-50 percent of their senior professionals represented by the same group, and the final one-third have less than 25 percent representation. While we believe our results are better than the industry, that is a low bar given the investment industry’s significant underrepresentation.

We would like to thank our investment partners for their contributions in allowing us to increase our grantmaking budget and our ability to support organizations working to expand opportunity for the people of California.