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A Letter from our CIO and Treasurer

Irvine’s investment portfolio had an exceptional year in 2017, with double-digit returns driven by robust equity markets globally. It was also a year of transition and growth for the Foundation’s investment team.

We tackled several key priorities that I identified when I joined Irvine as CIO one year ago. First and foremost, we rounded out our team with two new members. We also adopted a new asset allocation framework and updated our Investment Policy Statement. Finally, we streamlined and rebalanced capital among managers to align with our investment principles – and as part of our focus as a conviction-based investor.

Irvine’s Investment Principles

Our relationships with investment partners are critical to our continued success. That’s why, early in my tenure as CIO, the investment team articulated our shared Investment Principles; we believe it is important to share these with our investment partners so they can better understand Irvine’s approach to investments and what drives our behavior. I believe these principles are the foundation for building a successful investment portfolio:

  • 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 will help Irvine continue to evolve its investment strategies and the opportunities those can present. Like many endowments and foundations, Irvine’s investment portfolio currently has a significant exposure to equity securities, both public and private. This includes a significant commitment to venture capital and private investments. Irvine has benefited significantly from this positioning since the financial crisis. That said, private investments declined from 39 percent of the portfolio at the end of 2016 to 34 percent at the end of 2017. The private investment portfolio continues to track above the target allocation of the total portfolio due to multiple years of strong performance.

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 a 7.1-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.

2017 was a strong year, where the portfolio delivered a 13.5-percent return, driven primarily by robust global equity markets.

As a result of strong historical investment results, Irvine’s Board of Directors approved an increase in how much we can give as grants: from a $91 million budget in 2017 to $96 million in 2018. And that, at the end of the day, is why we are in business.

We would like to thank all of 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.