The primary goal for foundations is to reliably fund their mandates now and into the future. Yet for many, how their funds are invested is disconnected from this reality. Goals-based investing allows your foundation to get clarity and focus on what it takes to meet those obligations while achieving sustainability.
Goals-based investing addresses the holistic needs of the foundation by recommending appropriately designed solutions to achieve its goals, tracking progress towards them, adjusting the portfolio as necessary, and placing performance in the context of achieving goals as a measure of success.
Goals-based investing compels us to ask the question that really matters: “how can we meet our funding obligations with some degree of certainty?”
Ideally, adopting a goals-based approach comes down to understanding the true purpose of the funds, considering the levels of risk tolerance, taking into account different investment horizons or liquidity constraints, and focusing not on the gain or loss of the portfolio but on the probability of the portfolio to meet financial and investment goals.
For foundations, the benefit of pursuing a goals-based investment strategy comes down to one thing: sustainability.
A few decades ago, investment managers structured their clients’ portfolios independent of the general performance of the markets. Today, portfolio design stubbornly focuses on maximizing returns relative to arbitrary market indices and largely ignores client goals and risk tolerances.
It is our view that the overemphasis on relative performance instead of future capital and funding requirements has been a major contributor to missed targets and fund instability. After all, beating an index by 100 basis points is not a measurement of success in achieving a goal; it’s a means of measuring the success of a money manager against the market.
Increasingly, boards are realizing that their foundations are more than simply “pools of capital” but actual “asset management businesses”. As such, they need to be operated in a disciplined manner where assets, liabilities, revenues, and expenses are all managed prudently.
Goals-based investing is at the core of HighView’s investment philosophy. Before building your foundation’s portfolio, we get to know your foundation through an in-depth assessment process that allows us to understand its unique needs, goals, capital requirements, and risk tolerance. Combining this insight with our intelligent research, we architect a goals-based portfolio that addresses your priorities while remaining within your comfort level for risk and volatility.
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HighView Financial Group is a professional boutique investment counselling firm for affluent Canadian families and foundations.
Acting as your outsourced Chief Investment Officer, we work closely with you and your other professional advisors to design, implement, and manage tailored investment strategies to protect your assets and create long-term sustainability.