Three cups of cinnamon dulce flavored coffee, the Wall Street Journal and CNBC. Barbara VanScoy’s morning routine is mostly what you might expect for someone who manages an investment portfolio. She’s even got a Bloomberg Terminal set up in her home office.
“I’m typically reading a lot of materials from various sources,” says VanScoy. “In fixed income, I’m exploring municipal bonds and mortgage-backed securities so I have to know what’s going on in various markets.”
“Fixed income” is the investor term for treasury bonds, state or local government bonds, corporate bonds or securities backed by mortgages, small business loans or other forms of debt. The underlying borrowers generally pay a fixed amount per month or quarter, which is where the term comes from.
One day in mid-May, VanScoy had some cash in her portfolio that she was looking to move into a fixed-income investment. Like all portfolio managers, she has a certain risk tolerance and an expectation of higher returns for riskier investments. But VanScoy doesn’t work for a Wall Street firm, where she would merely be looking for the highest possible return for the relative level of risk for any investment. She happens to work for the F.B. Heron Foundation.
By federal law, private foundations such as Heron must spend five percent of their endowments every year on grants and operations — while the other 95 percent gets invested in stocks, fixed income investments and other assets. The income from those investments is what pays for foundations’ grantmaking and operations.
Across the U.S., around 120,000 private foundations currently hold more than a trillion dollars in their investment portfolios. But foundations have traditionally outsourced their investment portfolio management to professional investment firms — including many Wall Street firms.
In 2019, VanScoy became the first in-house fixed-income portfolio manager for the F.B. Heron Foundation, founded in 1992 with a mission to support low-income communities. Heron was the first, and one of the few, foundations to look at its investment portfolio not just as a way to fund its grants and operations, but as a way to achieve its mission as well. Hiring VanScoy was just one in a series of steps it took to build on that vision for how to invest its endowment.
Read the full article about decolonizing wealth by Oscar Perry Abello at Next City.
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