Annual Reports

2019 Annual Report
Report from the CIO


Performance – A Multi-Year Perspective

The Fund experienced its third consecutive year of positive performance in the fiscal year ended June 30, 2019 (FY 19), and finished with $7.1 billion in investment assets. FY 19 was distinguished by three quarters of strong performance, broken up by a December quarter that featured an extreme, risk-off bear market, as can be seen in Table 1. Altogether, over these four quarters, the Fund gained 5.3% (shown net of all manager fees and internal investment costs, as are all returns below).   


Table 1

Total Returns for

Quarter Ending:

Global Stocks (ACWI)

U.S. Stocks (Russell 3000)

YMCA Retirement Fund

Sept. 30, 2018




Dec. 31, 2018




March 31, 2019




June 30, 2019




Total Returns for Fiscal Year 2019:





Table 2

Period Through 6/30/19

Retirement Fund

Performance vs. Composite Benchmark

1 Year



3 Years



5 Years



7 Years



10 Years




Our Fund is focused on the long term, so one-year returns are just part of the results picture for a retirement plan like ours. Even returns over 3 years (9.2% annualized return), 5 years (5.4%) and 7 years (7.7%), as shown in Table 2, represent only short- and intermediate-time periods for measuring results.

When we consider the results over 10 years (8.9%) or 20 years (5.6%), the outcomes have a greater bearing on the retirement benefits we can sustainably provide. These two periods represent a stunning contrast in returns, primarily because the 10-year period began with markets close to a historic low level during the Great Financial Crisis, whereas the 20-year period began with markets near a tech-boom high.

Management and Trustees use a variety of benchmarks over multiple time periods to measure and monitor the Fund’s performance. As of June 30, 2019, the Fund outperformed each of its benchmarks over the last 3, 5, 7 and 10 years. However, the Fund underperformed each of the benchmarks in FY 19 – only the second time this has occurred in the last 10 years. While we pay close attention to short-term results and make course corrections along the way, our ability to take a long-term perspective is one of the Fund’s key investment advantages.

Macroeconomic and Market Environment

We remain cautious on the macro environment, as many seemingly incompatible indicators have begun to co-exist: growing geopolitical tensions in nearly all parts of the globe and yet rising financial markets; strong economic growth and yet modest inflation; expanding national deficits and yet low interest rates; and sinking corporate confidence and yet record consumer confidence. These inconsistencies create the likelihood of considerable volatility ahead in investment markets.

During FY 19, equity markets often reacted positively to the expectations of sustained growth propelled by lower interest rates. However, at some times such as during the December quarter, fear was the prevailing emotion — fear of the impact that escalating U.S.-China tensions could have on global growth and asset prices. During these times, faced with elevated uncertainty and dampened investor sentiment, central banks adopted a more dovish tone. As a result, interest rates globally remained quite low, with $13 trillion in debt having negative yields. Easy monetary policy may continue as long as the global growth outlook remains low and slow.

In the U.S., at the start of FY 19, most investors expected the Federal Reserve Bank to continue hiking rates. However, in December, the Fed signaled no further rate hikes and, in early 2019, hinted at rate cuts. Soon after, for the first time since 2007, the U.S. yield curve (measuring the difference between the three-month and ten-year treasury yields) inverted. Such a phenomenon has historically been a recession indicator, leading many to believe the Fed would or should cut short-term rates and remain accommodative for the foreseeable future in an attempt to forestall a downturn in growth in an economy whose expansion is now at record length.

Long-Term Investment Approach

The Fund manages an investment portfolio to meet our current and future obligations over the long term, including paying benefits in a timely fashion, generating 6–7+% long-term annualized returns, and minimizing the likelihood of a substantial, sustained drawdown of our assets. We will continue to accomplish this by doing the following:

  • Allocating approximately 75% of our Fund to high-expected-return asset classes, including public stocks and private equity investments in buyouts, real estate, certain natural resources, and venture-stage and growth-stage companies
  • Allocating approximately 25% of our Fund to a combination of U.S. government securities and certain diversifying strategies that are not highly correlated to public stocks and that we expect will produce attractive (or at least acceptable) long-term returns while as a whole retaining value or appreciating during periods of equity market distress
  • Diversifying by geography, asset class, sector, currency, and many other risk factors

Asset Pie AR2019


Fund Management focuses on (a) setting a well-thought-out asset allocation (see Chart 1) that balances the collection of risks we accept, as well as (b) carefully selecting and sizing a range of strategies and managers that we believe can achieve our investment objectives.

We are committed to the Fund’s mission and aim to achieve attractive returns that, over the long run, will enable us to provide our participants with sound benefits that empower them to achieve economic security after a career of service to the YMCA. We are confident that the combination of the Fund’s skilled staff and Trustees, well-considered investment strategy, and capable investment managers will enable the Fund to deliver strong performance over the long term.