The Edyth Bush Charitable Foundation is a fairly small fund at $85 million, but its staff and trustees are reshaping its investment approach to mimic that of much larger non-profits.
The Winter Park, Fla.-based foundations new investment advisory committee undertook an asset allocation review last year, said Michael R. Cross, vice president – finance and chief investment officer. The fund is now beginning the transition to a new mix scheduled to be in place by the end of 2008.
It will allocate 69% of its assets to total return; 17% inflation hedges; 8% real estate; 5% deflation hedges; and 1% all-purpose hedges. It will also move into three new asset classes: real estate, private equity and resource-related stocks. The plans previous asset allocation was 72% equities, 20% bonds, 5% hedge funds and 3%, cash.
The investment advisory committee is still determining the specific structure of the total return portfolio, which will include marketable equities, hedge funds, non-conventional bonds and private equity.
The fund is seeking managers for the inflation hedge and real estate categories. Inflation hedges will focus on resource-related stocks such as timber, paper, mining and energy. The fund will seek managers to run a 4% allocation to private real estate, and it already hired Duff & Phelps Investment Management Co. to run $3 million in a public real estate investment trust, Mr. Cross said.
The deflation hedge portfolio is managed in bonds by Pacific Investment Management Co., which had been the funds sole bond manager.
All-purpose hedge is a catch-all for the foundations cash and Treasury inflation-protected securities, managed by PIMCO, Mr. Cross said.