FAQs: Endowments & Foundations

Our investment philosophy includes the following elements, which permeate throughout Litman Gregory:

• A long-term investment horizon (when consistent with financial objectives)
• Diversification, not only to reduce variability of returns, but to protect against irrecoverable loss
• A bias toward fundamental, value-sensitive strategies
• Limited use of tactical deviations from long-term policy targets, primarily informed by extreme valuations
• Use of innovative portfolio construction techniques, asset classes, investment strategies, and managers
• Use of active managers only where we expect they will add long-term value
• A focus on minimizing fees and costs

For our endowment and foundation clients, Litman Gregory’s services can be considered in two categories: Outsourced Chief Investment Officer (OCIO) and Fiduciary Planning:

Outsourced Chief Investment Officer (OCIO): Our disciplined investment process combines the objectivity of a consultant with the agility and accountability of a discretionary manager.

Steps include:

• Creation and/or review of an Investment Policy Statement
• Development of appropriate benchmarks for performance reporting purposes
• Establish and/or review strategic asset allocation
• Implement tactical asset allocations as compelling opportunities present themselves
• Conduct active manager due diligence and selection
• Construct portfolios using a combination of passive investment strategies and select, high conviction active managers
• Explore mission-aligned investment programs (Environmental, Social and Governance or Socially Responsible Investing, including animal welfare)
• Explore and consider whether Alternative and Private Investments, including real estate, private equity, private debt, venture capital and hedge funds, are appropriate for the Foundation

Fiduciary Planning: We act as the personal partners of board members, and we provide continuous guidance to an organization, even as board and committee composition changes.

Topics include:

• Organization mission and goals review
• Spending policy review, based on spending modeling and capital-sufficiency testing
• Board education
• Governance best practices
• Nonprofit best practices
• Uniform Prudent Investor Act and other fiduciary requirements

We believe the following distinguishes Litman Gregory from our peers and as a leading provider of investment services to nonprofit clients:

Investment Experience and Risk Management.  With an impressive track record of strong risk-adjusted performance, our fundamentally driven investment approach seeks to balance our long-term outlook—and our clients’ unique goals—within a defined level of risk for each customized portfolio.

Advice with Accountability.  As a fiduciary partner, we take ownership of our clients’ goals as we help them navigate complex and volatile markets, balancing capital preservation with long-term growth, to help them meet their financial objectives.

Disciplined Investment Process.  We have made a significant commitment to independent research. Our in-house research team includes dedicated asset class and manager-selection research analysts. Further, we continue to integrate sustainable investing criteria into our investment framework, as we believe it makes us better stewards of our clients’ assets, improves risk management, and can increase returns.

Client Focus and Service.  Our relationship-driven service model ensures proactive attention and clear communication. With over 30 years of experience working with nonprofits, we can help you address a wide range of challenges, from investment policy creation to educating your board on investments and industry best practices.

Contact us with other questions about our expertise and service for endowments and foundations.

Litman Gregory has a strong commitment to serving the interests of our clients and a focus on exceptional client service. As your fiduciary partner, our first step is to gain a deep understanding of your institution: the long-term objectives, fundraising goals, spending policies, and anything else that affects your success. As such, the most robust activity occurs early in our client relationships and we encourage frequent interaction and seek to provide proactive communication. Ultimately, each client will drive their preferred method of interaction, which often involves formal quarterly in-person or video meetings and communication.

As an independent registered investment advisor, we have a fiduciary duty to always act in your best interest. This eliminates conflicts of interest, ensuring that every investment we select for your portfolio is based on your needs, not because we are compensated for recommending it.

Litman Gregory’s services are provided on a fee-only basis and are billed quarterly based on the total account value of all assets placed under management.

For unmanaged assets, such as those in liquidity accounts, we offer our services for a limited fee, or no fee, depending on the specific situation. All the services Litman Gregory provides are included in the account level fee. We do not charge separately for individual services.

Litman Gregory has meaningful experience in environmental, social, and corporate governance (ESG) investing, and increasingly, these strategies are a strategic focus of our firm. We believe the integration of ESG factors into an investment process promotes social and environmental good at the company level and can improve overall risk management and investment performance. As a result, for several years, we have been incorporating ESG investment options into our client accounts and conducting due diligence on active and passive ESG and impact investments.