Sample Investment Allocation Strategies

Sample Investment Allocation Strategies

These investment strategies show how you might recommend an allocation of your donor-advised fund assets among investments in various categories. Keep in mind that it is important to periodically review your strategy to make sure it continues to be consistent with your philanthropic goals. Please note that these examples are not based on market forecasts, but simply reflect an established approach to investing. They are not the only strategies available to you, and you may continue to recommend a complete allocation to an individual investment pool if you would like.
If one of these investment strategies matches your needs, you may use it to help create an asset allocation plan for your donor-advised fund.
Short Term
Conservative
Balanced
Growth
Average Annual Return1:
1970-2009: 6.9%
Best Year: 19.8%
Worst Year: 1.4%

For donors seeking the most stability
Average Annual Return1:
1970-2009: 8.2%
Best Year: 22.8%
Worst Year: -4.6%

For donors seeking stability who are less concerned about growth
Average Annual Return1:
1970-2009: 9.6%
Best Year: 29.2 %
Worst Year: -16.6 %

For donors who plan to
recommend grants over a longer period of time and want moderate growth potential. Likely to entail some fluctuations in value, but presents less volatility than the overall equity market
Average Annual Return1:
1970-2009: 10.0%
Best Year: 34.4%
Worst Year: -29.5%

For donors who plan to
recommend grants over a very long period of time and want the highest growth potential. May entail substantial year-to-year volatility in value in exchange for potentially high long-term returns
Individual Investment Pools


60% Cash Investments
(Money Market Pool)
40% Fixed Income
(Income or TIPS Pool)
Individual Investment Pools


30% Cash Investments
(Money Market Pool)
50% Fixed Income
(Income or TIPS Pool)
15% Large Cap Equity
(Large Cap Equity Index
or Managed Pool, Socially Responsible Pool)
5% International Equity
(International Equity Index
or Managed Pool)
OR
Asset Allocation Pools
100% Conservative Pool
Individual Investment Pools


5% Cash Investments
(Money Market Pool)
45% Fixed Income
(Income or TIPS Pool)
30% Large Cap Equity
(Large Cap Equity Index
or Managed Pool, Socially Responsible Pool)
8% Small Cap Equity
(Small Cap Equity Pool)
12% International Equity
(International Equity Index
or Managed Pool)
OR
Asset Allocation Pools
100% Balanced Pool
Individual Investment Pools


5% Cash Investments
(Money Market Pool)
15% Fixed Income
(Income or TIPS Pool)
45% Large Cap Equity
(Large Cap Equity Index
or Managed Pool, Socially Responsible Pool)
15% Small Cap Equity
(Small Cap Equity Pool)
20% International Equity
(International Equity Index
or Managed Pool)
OR
Asset Allocation Pools
100% Growth Pool
(1)Source: Schwab Center for Financial Research with data provided by Morningstar, Inc. The return figures for 1970-2008 are the compounded annual average, the minimum and the maximum annual total returns of hypothetical asset allocation plans. The asset allocation plans are weighted averages of the performance of the indices used to represent each asset class in the plans, include reinvestment of dividends and interest, and are rebalanced annually. The indices representing each asset class in the historical asset allocation plans are S&P 500® Index (large-cap stocks); CRSP 6-8 Index for the period 1970-1978 and Russell 2000® Index for the period 1979-2008 (small-cap stocks); MSCI EAFE® Net of Taxes (international stocks); Ibbotson Intermediate-Term Government Bond Index for the period 19701975 and Barclays Capital U.S. Aggregate Index for the period 1976-2008 (bonds); and Ibbotson U.S. 30-day Treasury Bill Index for the period 1970-1977 and Citigroup U.S. 3-month Treasury bills for the period 1978-2008 (cash investments). Indices are unmanaged, do not incur fees or expenses, and cannot be invested in directly. Past performance is no indication of future results.
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