Suchanapproachisnecessary,Brelsfordsays,toreachatargetreturn on investment of 5 percent, which is distributed in grantmaking, plus 2 to 2.5percenttocoverinflation.“Ourtargetisprettyhigh.Theonlywayweare going to get there is to invest in the components of growth.” Less than 20 percent of the Legacy Perpetual Fund, for example, is invested in fixed-income assets, which traditionally could be expected to account for up to 35 percent of the portfolio. Nearly a decade of steadily falling interest rates contributed to the lower reliance on fixed income. The strategy of investing more in equities also strays from tradition, placing a stronger emphasis on international markets than in previous years, particularly emerging markets, such as China and India. The stars aligned in the equity markets last year in ways not often seen, astheanticipation ofU.S. corporatetax cutsandstrong growthinemerging marketsthrewanalreadyunprecedentedbullmarketintohighgear.Domestic equityperformedextremelywellwithreturnsgreaterthan20percent.Emerging markets did better, posting returns of more than 30 percent. The Legacy Perpetual Fund’s diversified strategies asset allocation, with its utilization of more market-neutral or idiosyncratic strategies, also performedwell.Thatpartoftheportfolio,whichhastheflexibilitytotrade bothlongandshort,seekslowervolatilitythanequitiesandhigherreturns thanfixedincome.EventheFoundation’smixoffixed-incomeinvestments turned out to be less of a drag on earnings than would be expected in an overheated equity market. The overall success of the investment strategylastyear,Brelsfordsays,“wasdriven by our exposure to public equity. But I’d say itwaseverythingworkingthewayitshould.” Byyear’send,theFoundationhadwell overonebilliondollars,whichincludedthe LegacyPerpetualFund,LegacyIntermediate FundandLegacyGrantmakingFund,which aremanagedinternally,aswellastheassets oftrustsanddonor-advisedfundsmanaged by others. Donors can expect the Foundation to adheretoitsfundamentalstrategyoftaking a long view of the markets, trying to reduce investment expenses and focusing on the search for growth, wherever it mightbefound.TheFoundation,forexample,isexpandinginvestmentin private equity and remains committed to investing in emerging markets, whereanincreaseinthenumberofconsumerswithmoremoneytospend raises the potential for growth. What donors shouldn’t expect, says Brelsford, is for the Foundation toattempttotimethemarket inhopesof engineeringremarkablereturns. He is the first to report that he didn’t see the 2017 earnings spike coming. “We don’t spend a lot of time trying to predict what the coming year will be like.Thedisciplinewebringisonethatislong-termfocused.Yearslikelast year are fantastic. But we’re not making radical changes to the exposure we have in domestic or international equity or emerging markets on a year-to-year basis.” ▪ LESSON LEARNED It’sunrealisticto expect2017returns annually.Instead thefocusshouldbe onsteadygrowth leadingtoaconsistent grant-makingpool. 48 SUPER MARKETS