Since inception, the Adele Katz Endowment for the Arts generated a 28% total return between donations, capital gains and dividends that was split between the portfolio and local charities. This provided a 13% return in the portfolio and a 15% return that was manipulated in the financial markets and given to charities in the form of $750.
In addition to these returns the endowment owns charitable assets such as green bonds and charity-oriented exchange traded funds that split their return with the endowment. This way good is being done on both sides of the portfolio.
In this first quarterly report of the Katz Endowment I will reveal a behind-the-scenes look at how this little fund can be a viable charity engine whilst also outperforming the broader markets. I will then discuss a little about what we own and where the money has come from. I will conclude with my favorite segment; the su
ccess stories thus far from this new endeavor.
First let us begin with some data. In the table below are the statistics as of 9/28/2020 for the Katz Endowment. This data has been cross-referenced with the broader market benchmarks over the last quarter("selected period") and since the portfolio's inception("YTD").
Now, let's unpack this data a little.
During the last quarter we can see that the endowment has underperformed the S&P 500 by 3.54%. However, since the portfolio'
s inception on Black Monday 2020 the endowment has actually outperformed the broader index by 6.06%.
This gain in the portfolio has occurred even after splitting capital gains with charities and donating all dividends. This implies that, given more funding, the endowment can unquestionably outperform the market whilst splitting a large proportion of funds with the community.
In the last six months the market has been artificially inflated due to federal stimulus funds combined with SoftBank's continuing acquisition of American stocks. Markets love inflation due to the fact that stocks are worth more dollars when the value of the dollar goes down.
In a market where the dollar is declining prices inflate uniforml
y across the market. Thusly, buying power among investors is lost very rapidly and the inflated values are ultimately meaningless because no investment capital has been gained. My ideology in this situation was to use a declining dollar to the advantage of the broader community. By exposing funds to areas of the market being inflated by these sources of proverbial hot air and then dispensing the funds to places where small amounts would make an impact. In this situation the inflated "funny money" that was meaningless to the investor has been converted into tangible goods for the community.
The endowment owns an array of securities that are constantly growing. To maximize growth the portfolio is rather unbalanced at the moment. To justify the imbalance, I will state that every security goes through careful analysis before being added to the portfolio. In addition the fund is largely placed with banks that use a different lineage of investment theory than I do. However, brace yourself, I am prepared to justifiably put up to 35% of the fund in a single security if I feel it is warranted.
Meat the team!
Here's what the fund owns and why as of 9/28/2020:
Morgan Stanley - 33.14% : Morgan Stanley uses Modern Portfolio Theory instead of Security Analysis so I can diversify the endowment with a different investment lineage.
Global X Education ETF - 13.47% : This ETF funds higher education and technological innovation in the classroom.
Arbor Realty Trust - 13.2% : Arbor Trust has been incredibly well managed through the pandemic and pays the high return necessary to fuel the fund.
Barrick Gold - 9.08% - We all need a safety plan... GOLD is our insurance to be able to expand the portfolio in unfavorable market conditions. It also pays a dividend that is given to charity.
Waste Management - 7.46% : WM is the industry leader in clean waste control and city disposal contracting. They are also highly rated as a performer in the markets.
NAACP Miniority Empowerment ETF - 5% This ETF invests in socially conscious companies and then splits the return between the NAACP and the Katz Endowment.
Kraft Heinz - 4.88% : KHC is a leader in packaged food and also pays one of the substantial returns necessary to keep the dividend engine movin
Now... For the part of this I have been looking forward to since the minute I started typing... The reason for this whole thing.... The success stories!
Below is a timeline of the fund's donations punctuated by information I thought to be relevant along the timeline. As you read, it is important to note that I transformed a $431 cost-basis into over $700 that was given back to the community. If more funds were pumped into this model just imagine what could be done!
5/19/2020 - After two months of churning the fund in the markets I made the first $90 donation to the NM Musicians Relief Fund.
5/26/2020 - $100 was given to the NM Art League.
5/27/2020 - $50 was given to the Chicago Children's Choir to aid in covid losses.
At this point inflation began to take over the financial markets and I utilized it to fuel the next
6/10/2020 - $100 was given to Locker 505 Student Clothing Bank to aid in their damages caused by vandalism. $100 was also given to Horns in Hand Instruments for Students the same day.
6/18/2020 - $100 was given to Bold Futures NM to provide medical and reproductive care for young women of color.
8/14/2020 - $100 was given again to Horns in Hand Instruments for Students and $100 was given to AirDance NM to aid in their continued ae
rialist classes for children and adults.
Why so many donations to Horns in Hand?!
I'm glad you asked!
The funds that were given to Horns in Hand were used to give a music scholarship to a child for the onlinebandclass.com program. When I heard of this success story my heart completely skipped a beat and suddenly I realized why this is all so worthwhile.
My grandma, for whom the fund is named, was an avid music and art lover. She was well-known in her Brooklyn neighborhood because she believed that the arts were a necessary piece of everyone's education so often overlooked. She would often take entire groups of neighborhood children to plays, concerts and anything she considered culturally important.
It is my mission with this fund to continue that tradition and bring the arts to people the same way she did.
I hope you have enjoyed this first quarterly report of the Adele Katz Endowment For The Arts and I hope there will be much exciting news to come.
Investment Fund Manager
Adele Katz Endowment For The Arts