The Episcopal Church Foundation in West Texas

Investment Program

Q UARTERLY R EPORT
September 30, 2016
Market Report
After the worst start for a year ever, common stocks recovered and have continued to
gain ground in the third quarter. The most popular US market indices (Dow Jones, S&P500,
NASDAQ) all established new all-time highs in August. The Brexit vote in the UK triggered
some sell-off in September, but by quarter end domestic equities had gained nearly 4.5% for the
quarter and 8% for the year.
As the chart below shows, for Q3 small cap stocks performed substantially better than
large cap stocks and the growth style outperformed the value style in both large and small cap
categories. International stocks rebounded from Q2 with nice gains this quarter. Year-to-date,
international stocks trail the performance of the US market.
The performance of bonds was much more subdued, with short-term bonds flat and
intermediate-term bonds gaining only one-half percentage point. Year-to-date, fixed income
securities have achieved reasonable gainsabout 5.8% for intermediate-term bonds.
Market Returns for Quarter
1
9.2%

8.9%

6.3%

4.6%
3.5%

0.0%

Model Portfolio Review

Large Cap
Growth

Large Cap
Value

Small Cap
Growth

Small Cap
Value

International
Stocks

Short Term
Bonds

0.5%

Intermediate
Bonds

All four of the Foundations investment strategies (represented by model portfolios)

achieved reasonable gains for the quarter. Performance relative to peer groups was mixed, but
slightly unfavorable compared to passive indices for most models.
A manager change was made during the quarter to reduce by half the allocation to
Touchstone Sands, with a corresponding allocation to a Russell 1000 Growth Index fund
managed by Vanguard.
Details of the performance of the four models are shown below.
Asset Class Investment Results
The Foundations performance this quarter for the three assets classes in which it invests,
along with comparative benchmark returns, are shown in the following table.
Asset Class
Common Stocks
Fixed Income
Cash Equivalents

Return
4.9%
1.6%
0.0%

Benchmark
4.4%
0.5%
0.0%

Account Status
Foundation assets at quarter-end totaled $63 million, an increase of $2.5 million during
the quarter. Investment gains were $2 million or 3.4%. One new account was opened during the
quarter, with an initial deposit of $59 thousand.
At September 30th, the Foundation had a total of 208 accounts as follows:
Ownership
Churches/Schools
Diocese

Number of Accounts
152
56

Amount
34.7 million
28.3 million

Portfolio Performance as of September 30, 2016*

Growth

Portfolio Total Return

+/- Peer Group Composite
+/- Index Composite

3 Mo

1 Yr

3 Yr

5 Yr

3.08
(0.26)
(0.59)

7.88
(0.98)
(2.25)

4.53
(0.85)
(1.91)

9.36
(0.41)
(1.20)

3 Mo

1 Yr

3 Yr

5 Yr

2.93
(0.03)
(0.22)

7.60
(0.03)
(1.89)

4.53
(0.39)
(1.60)

8.04
0.03
(0.75)

3 Mo

1 Yr

3 Yr

5 Yr

2.61
0.06
(0.04)

7.19
0.42
(0.92)

4.19
(0.06)
(0.98)

6.56
0.25
(0.23)

3 Mo

1 Yr

3 Yr

5 Yr

0.70
0.08
0.19

1.59
0.25
0.25

1.13
0.15
0.16

0.99
0.08
0.22

Growth & Income

Portfolio Total Return

+/- Peer Group Composite
+/- Index Composite

Income

Portfolio Total Return

+/- Peer Group Composite
+/- Index Composite

Capital Maintenance

Portfolio Total Return

+/- Peer Group Composite
+/- Index Composite

* Returns for greater than one year are annualized. Past performance does not guarantee future
results.