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The Inflation Outlook for Non-Profit Portfolios

Executive Summary:  The Inflation Outlook for Non-Profit Portfolios
Fall 2021

Please click on the Download PDF button to read the full whitepaper.

For the first time in decades, year-over-year US inflation is meaningfully exceeding the Federal Reserve’s 2% target, a notable departure from the low and stable inflation regime that the US has enjoyed since the early 1980s.  We would argue that this regime, and the associated lower interest rate environment, has been instrumental in a variety of strong economic and financial market outcomes.

Over the last few months, a variety of market participants, journalists, policy makers, and others have engaged in a spirited debate as to where inflation will head in the coming quarters and years. The key question is whether this recent spike in prices is transitory as the Fed and Biden administration have suggested, or emblematic of a move away from this highly desirable, low, and stable regime.

Our view is that while inflation may be a bit higher than what we have become accustomed to and persist at higher levels for longer than what was originally suspected, we do not believe that the economy will depart the low and stable regime. We have identified and then examined five key dynamics that we feel strongly will be instrumental in dictating price levels in the coming years. Below is a summary of our views on these dynamics:

It’s worth pointing out that even if inflation does drift into a higher range (e.g. 2%-4%), but remains stable, we do not think that will be overly problematic for the economy or financial markets. Indeed, over the long term, equities have earned strong returns as long as inflation remains below 6%.

In terms of our positioning, we are still overweight equities and underweight fixed income markets. At current interest rate levels, bonds are quite unattractive, and the risk of higher inflation only amplifies this. While equities are certainly not inexpensive from a valuation standpoint, we do think that the combination of strong earnings growth and low interest rates give equities a good chance of delivering solid returns.

The last 18 months have represented uncharted territory in markets, economies, and policy making, creating a series of fascinating dynamics that we continue to watch play out. While we certainly have a view on inflation and where it is headed, we are acutely aware of how quickly and meaningfully things can change. As the world evolves, we will be clear-eyed in updating our views on inflation and markets more broadly.

Please click on the Download PDF button to read the full whitepaper.

Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.

There is no guarantee that any particular asset allocation or mix of strategies will meet your investment objectives.

The materials are being provided for informational purposes only and constitute neither an offer to sell nor a solicitation of an offer to buy securities. Opinions expressed herein are those of TIFF and are not a recommendation to buy or sell any securities.

The enclosed materials may contain forward-looking statements relating to future events. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” the negative of such terms or other comparable terminology. Although TIFF believes the expectations reflected in the forward-looking statements are reasonable, future results cannot be guaranteed.

TIFF Welcomes New Board Member Bola Olusanya

TIFF Investment Management is pleased to welcome Bola Olusanya to the Board of Directors of TIFF Advisory Services, Inc.

Bola Olusanya serves as Chief Investment Officer at The Nature Conservancy (Arlington, VA), the global environmental organization dedicated to conserving land and water, and has more than 20 years of experience in investment management as both an executive and thought leader in both the nonprofit, conservation and investment industries.

Mr. Olusanya’s expertise, unique nonprofit experience and knowledge will support TIFF’s asset allocation and portfolio construction in addition to Board governance and oversight.
Prior to his role at The Nature Conservancy, Mr. Olusanya was a Managing Director at Key Private Bank and Strategic Investment Group. He has also held positions at Vanderbilt University’s investment office, Emory University’s investment office, and senior positions within the Nigerian banking sector.

For more information on TIFF’s Board, visit: TIFF Board of Directors.
All data as of September 30, 2021

TIFF Webinar: Private Equity Education and Q&A with Williams College

TIFF hosted a webinar with Williams College titled Private Equity Education and Q&A on September 30th.   Chris Anderson, Brendon Parry, CFA, and Kevin O’Connell, CFA were joined by Julia Crosby, Managing Director, from the Williams College Investment Office.

The discussion included a review of key fundamental principles of private equity investing and why it remains an important component of endowment portfolio construction.  TIFF introduced a Private Equity Primer to provide information about Private Equity basics on the call.  You can access the Private Equity Primer here.

You can view the webinar through the link below.

Webinar: Private Equity Education and Q&A

Please note that this webinar has been edited from its original recording to shorten its length.  This webinar is for general informational purposes only and does not constitute an offer to sell nor a solicitation of an offer to buy securities. The asset classes discussed may not be suitable for all investors.  All expressions of opinion are subject to change.  Past performance does not guarantee future results.  All investments are subject to risk, including the possible loss of principal.

PANELISTS

JULIA T. CROSBY
Managing Director, Johnson, Williams College Investment Office
Julia Crosby serves as Managing Director, focusing on global public equity (long-only) and private equity (buyouts, venture capital, and real estate). Prior to joining the Investment Office in 2012, Ms. Crosby was a Research Consultant at NEPC, Private Equity Senior Manager at Alcatel-Lucent Investment Management Corporation, Vice President at Silicon Valley Bank, and Senior Associate at BancBoston Capital. Ms. Crosby holds a B.S. in Business Administration from Babson College.

CHRIS ANDERSON
Director, Private Investments – TIFF Investment Management
Chris Anderson joined TIFF in 2015. He performs investment research and selects and monitors external investment managers, secondary interests, and co-investments, focusing on TIFF’s Private Investments Program. Prior to joining TIFF, Mr. Anderson spent six years managing the private equity portfolio for Alcatel-Lucent Investment Management Corp., and three years as an investment associate focusing on buyout and venture capital investments at SVG Advisers. He holds a BS in marine engineering systems from the United States Merchant Marine Academy and an MBA from the F.W. Olin Graduate School of Business at Babson College. Mr. Anderson also serves as Chairman of the private equity committee for the Babson College Endowment and is a member of the College’s investment committee.

BRENDON PARRY, CFA
Managing Director, Private Investments – TIFF Investment Management
Brendon Parry joined TIFF in 2011 and serves as a Managing Director, overseeing TIFF’s Private Investments Program, including the selection and monitoring of external managers, secondary interests, and co-investments; risk management; and portfolio construction. He is a member of TIFF’s Investment Committee. Prior to joining TIFF, Mr. Parry was a Senior Associate at Providence Equity Partners and worked in the consulting group at Cambridge Associates. Mr. Parry holds an AB in economics from Brown University and an MBA from Harvard Business School. He is a CFA charterholder and serves on the Investment Committee of Belmont Day School.

KEVIN O’CONNELL, CFA
Director, Member Strategy – TIFF Investment Management
Kevin O’Connell joined TIFF in 2017 and serves as a Director in the Member Strategy Group. He focuses on outreach to existing and interested member organizations, communicating TIFF’s strategies, portfolio characteristics, investment approach, and policies. Before joining TIFF, Mr. O’Connell was a vice president in the Private Wealth Management group at Goldman Sachs and previously served in outreach roles at BNY Mellon Investment Management and Westfield Capital Management. He holds a BA in art history from Boston College, holds an MBA from the University of Virginia’s Darden School of Business, and is a CFA charterholder. Mr. O’Connell serves as President of the Alumni Council of The Roxbury Latin School and and is a member of the Weston Soccer Club Board of Directors.

TIFF Private Equity Primer

TIFF aims to serve the private equity investment needs of our nonprofit members.  We recently developed a Private Equity Primer as a guide to understanding the basics of private equity.  You can access the primer by clicking on the Download PDF link above.