Risk Pools

The investment policy of Waco Foundation has been expanded to ensure donors and organizations have the option to invest funds in assets that meet the growth and income needs across a variety of time horizons.  Before making a decision on how to invest your fund, you should consider how long you expect to hold the majority of the balance of the fund, whether or not you hope that it appreciates and if you can tolerate fluctuations in the balance.  Funds exposed to anything other than cash will experience both appreciation and depreciation, but they will grow over time. Funds exposed only to cash or bonds will maintain current value, but the real value of these funds will erode over time because of inflation.  

Endowment Pool: Consistent income over time

• The purpose of this portfolio is to generate income in perpetuity without invading corpus of the fund by providing a steady stream of income and consistent purchasing power for funds on a permanent time horizon, essentially 5% to 6%, plus inflation. Assets are held in a conservatively and prudently-managed diverse portfolio which includes a mix of both active and passive investment strategies. The asset allocation Strategy includes stocks, fixed income, emerging markets, inflation-protected securities, alternative investments and real assets invested in both domestic and international markets. Waco Foundation’s Unrestricted Fund is invested in the Endowment Risk Pool. Allocation to this pool is as follows:

Short Term Pool: Current grantmaking strategy

• The purpose of this portfolio is to provide a high level of liquidity for funds with short term grantmaking strategies (no risk and no return). This pool is designed with a time-horizon of three years or less. Allocation to this pool is as follows:

Intermediate Term Pool: Intermediate term grantmaking strategy

• The purpose of this portfolio is to balance mild liquidity needs with a reasonable level of expected appreciation over full market cycles (low risk and small return). This pool is designed with a time-horizon between three and seven years. Allocation to this pool is as follows:

Long Term Pool: Income determined by equity & bond performance

• The purpose of this portfolio is to mimic the Endowment as close as possible without including Alternative Investments. This pool is designed for non-permanent funds which will last more than seven years. Allocation to this pool is as follows:

Growth Pool: Income determined by market performance

• The purpose of this portfolio is to experience the growth and fluctuations of the market while adhering to an acceptable level of risk through equity level diversification.  By removing fixed-income securities and cash equivalents, this portfolio can mirror the direction of the overall equity market more closely.  This portfolio has the highest risk yet generally offers the highest return. Allocation to this pool is as follows: