Investment advice and solutions for endowments and foundations

We have over 50 years of experience with endowments and foundations, such as charities and not-for-profits. Our independent research, advice and tailored investment solutions aim to help you deliver better investment outcomes, while staying true to your mission.

Ensuring sustainable philanthropy

Each endowment, foundation or charity is unique in its mission and approach, and its investment portfolio should reflect that. Your investments should work to provide long-term growth while reflecting what your organisation stands for. This requires a bespoke approach to investment to help ensure that there are no nasty surprises that could either disrupt your mission or damage your organisation’s reputation.

Investment considerations for endowment and foundation organisations

  • Alignment

    Aligning your portfolios to your mission demonstrates your commitment to issues important to your organisation. It involves assessing asset managers, strategies and providers to ensure they are aligned to your objectives. It also requires a transparent monitoring and reporting framework to ensure investments remain aligned to your objectives and policies.

  • Efficiencies 

    Investors are currently faced with market volatility so it’s important to build robust portfolios, and strategic asset allocation, designed to deliver efficiencies and capture opportunities. Your portfolios should adhere to your overall risk appetite and take into consideration how fees and other costs could impact the outcome of your financial goals.

  • Expertise

    Professional investment advice can help you navigate an increasingly complex investments market and define a strategy that is aligned with your goals. We can review your investments, including your asset allocation and approach, against your goals and help you identify which areas need to be prioritised. We provide sound advice to help you feel confident in your long-term investment strategy.

  • Flexibility

    It’s important that your portfolio is designed in a way that makes it responsive to changing circumstances and market movements. This flexibility means you won’t be caught off guard by adverse events and that your portfolio is well positioned to take advantage of potential opportunities that may arise. We can help you integrate flexibility into your strategy and portfolios.

  • Service standards

    When working with external advisers or consultants, you need to ensure that they have the experience and the capacity to build, manage and monitor your portfolio with the utmost care. We work as an extension of your team to help you address topics most important to you, like alternative investments, or sustainability. This will allow you to focus on other priorities to help achieve your mission.

  • Sustainability

    Investing sustainably is a key goal for many investors. There are a few areas to consider, including environmental, social and governance (ESG) considerations; diversity, equity and inclusion (DEI) factors and impact investing opportunities which seek to help investors address key issues without having to compromise on overall financial goals.

Three steps for reviewing and setting your strategy

You should carefully review your objectives and beliefs and assess whether they have been changed and how they can be documented. Below are some questions to help guide your review:

  • What is your timeframe for investment?
  • What return do you need?
  • How much do you plan to spend?
  • At what point does a market drawdown impact your ability to meet your spending requirements?
  • What are your sustainability goals?
  • What positive impacts do you want your investments to have?
  • Who are your stakeholders and what do they need? For example, is reporting required?

Align investment strategy with your objectives and beliefs. You should consider having a broad opportunity set available across the full range of asset classes.

Consider how your strategy helps you achieve these goals and assess options if it doesn’t. What strategic asset allocation helps you get the return you need, allows you to spend at the rate you need and fits with your risk appetite? How can you ensure your investments make a sustainable, positive impact?

Once you have defined your goals and strategy, you need to identify and allocate to quality managers who can best deliver value for money and help you achieve your objectives. You should ensure to conduct extensive due diligence on asset managers.

Investment advice in action for a large charitable trust

Many of our clients want to spend more time on their core charitable purpose. However, they recognise that this requires financial success in their investment portfolios. This can be a challenge in terms of time, resources and expertise.(1)

One large charitable trust we worked with wanted to build a longer-term strategy, incorporating sustainability and the ability to fund the grants at the core of the trust’s mission. The trust’s investments were not well diversified and were exposed to potentially significant risk from falling asset prices.

Meanwhile, the trustee board needed to manage the operational aspects of its investments, however its in-house team didn’t have the resources and expertise to do so.

We worked with the trustee board to design a strategy to support a consistent level of grants each year, while seeking to retain the real value of trust assets over the long term. Together, we implemented a robust, diversified and ESG-aware investment strategy, helping reduce risk and position the fund to access potential opportunities.

We then implemented the strategy on behalf of our client through a range of highly-rated asset managers(2) that were reviewed and assessed by our global research team. We helped them efficiently access private market opportunities without the need for additional internal operational resources. The client now makes investment decisions based on better reporting and transparency around their portfolio. By working as an extension of their team, we provide our client with the opportunity to focus on other priorities for their mission.

Key benefits for the client:

  • Improved governance structure

  • Asset managers and strategies

  • Integration of ESG considerations

  • Reduced investment costs and risks

Common questions from endowment and foundation investors

We can help you improve the probability of achieving a better investment return by focusing on three key areas that are critical for any investment strategy.

  1. Portfolio mix: Review your strategic asset allocation and integrate alternative asset classes such as private market opportunities that help potentially provide strong returns.(3)
  2. Improved governance: Define and develop a strong governance structure that is designed to help you make better-informed decisions and implement them efficiently.  
  3. Managing costs: Costs can significantly impact outcomes and are a critical factor. Our scale enables us to reduce both your explicit and implicit costs.

Implementation services, sometimes referred to as OCIO or fiduciary management, provide you with the expertise of a specialised investment firm to help you manage your investments. You can use the services to help you make and execute investment decisions on key topics such as asset allocation and asset manager selection or you can enable the OCIO to make decisions on your behalf.

We have extensive implementation experience and can execute investment decisions quickly, efficiently and in a risk-controlled manner on your behalf. Working with us means you can leverage our expertise and operational experience and access a dedicated team that understands your organisation and needs. We strive to deliver economies of scale, quality asset managers and potentially lower costs.

Private market investments such as infrastructure, private equity, private debt and real estate can all offer you important sources of potential returns and income that are less correlated with public equity and bond markets. 

However, accessing these opportunities is not as easy. Looking for an investment partner with scale, experience, and strong relationships with high quality managers around the world.

Extensive monitoring, reporting and engagement is critical to a successful review process of an asset manager. Having a solid understanding of the asset manager’s strategy, approach and specific exposures allows you to make better decisions.

We conduct extensive research of thousands of asset managers and strategies and provide this forward-looking reporting via our MercerInsight® research platform, through our advice and it's integrated into the solutions we deliver clients.

Although it’s extremely difficult to predict where the next economic shock will come from, it’s important that your portfolio is well diversified and that this is tested on a regular basis.  

Diversification is achieved through a mix of asset managers, asset classes and exposures, and drivers of return. Most endowments, foundations and charity investors are very well positioned to invest in less liquid asset classes which can help reduce the volatility in your portfolio.

We can help you build a diversified portfolio and strategic asset allocation that is well positioned for the future and also enables you to take advantage of short–medium term opportunities that may arise.(4)

We have decades of experience helping clients across the globe integrate sustainability into their portfolios. This includes ESG, impact investing and diversity, equity and inclusion (DEI) strategies. We can help you construct a portfolio and strategy to support your organisation’s wider goals.

We can work with you to develop the policies and principles that are aligned to your requirements and we will work with you to ensure these are executed, monitored and developed over time.

We can help you develop and execute a diversity, equity and inclusion (DEI) policy and process within your investment portfolios. We provide advice on KPIs and a framework to monitor these KPIs for all of the managers within your portfolio. We place a high value on diversity and inclusion when monitoring and selecting asset managers.

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Investment solutions to suit your needs

  • Implementation

    We can help you define, develop and implement your investment strategy by addressing areas such as governance, risk, sustainability and diversification. We flex our services to suit your needs and help you achieve your investment goals.

  • Sustainable investments 

    We help you build a sustainable investment strategy that integrates environmental, social and governance (ESG) considerations; diversity, equity and inclusion (DEI) factors and seeks an optimal mix between positive change and favourable returns.

  • Alternative investments

    Leveraging our existing relationships with hundreds of asset managers around the world, we can help you identify and source new investment strategies, opportunities, ideas and innovations across private markets and hedge funds. 

  • Strategic research 

    Become a member of the MercerInsight® Community today to get access to strategic research from hundreds of thought leaders around the world, including Mercer and third-party publishers. It’s complimentary and easy to join.

  • Asset manager research 

    By subscribing to MercerInsight®, an alliance with eVestment, you can gain access to data, analytics and our forward-looking research on asset managers and thousands of investment strategies across both public and private markets. 

  • Managing investment risk

    Our Mercer Sentinel team can help you conduct due diligence and mitigate operational risks across your portfolios and strategies. We assess asset managers, custodians and other service providers to help you deliver on your governance objectives.

Leverage our breadth and depth

$16.2T

US $16.2 trillion in global assets under advisement1

$492Bn

US $492 billion in global assets under management2

11K+

More than 11,900 investment strategies rated3

3K+

More than 3,000 asset managers rated4

* 1 June 30, 2023,  2 June 30, 2024,  3 March 31, 2024,  4 March 31, 2024
We believe our significant scale and well-resourced team are best positioned to help you understand financial markets, construct an appropriate investment portfolio, and set out a long-term, sustainable strategy aligned with your organisation’s goals and mission.

Related insights

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    See our important notices

    *ESG investing refers to environmental, social, and governance considerations that may have a material impact on financial performance, and therefore are taken into account, alongside other economic and financial metrics, in assessing the risk and return potential of an investment. Thematic investing involves investing with a goal, at least in part, to achieve an impact on an environmental, social, or governance issue, alongside generating return and mitigating risk. As always, the decision whether to invest in ESG-themed options, like all options, must be made pursuant to a prudent process with the objective of advancing the financial interest of the plan and its participants.

    **Fee savings cannot be guaranteed.

    1. All case studies included in this presentation are for illustrative purposes only. Please note that the case study included is based on a real-life scenario, but all identifying information has been anonymised to protect the privacy and confidentiality of the parties involved. The purpose of this case study is to provide a general understanding of the services provided and the outcomes achieved. The results mentioned in this case study may not be typical and may vary depending on individual circumstances. This case study should not be considered as legal advice or a guarantee of similar results.
    2. Please see the Guide to Mercer's Investment Strategy Ratings
    3. Mercer cannot guarantee access to opportunities. Access is at the discretion of the investment manager.
    4. Diversification does not guarantee a profit or protect against a loss.