The W.K. Kellogg Foundation on the Impact of Hedge Funds

 

Carlos Rangel, Vice President and Chief Investment Officer at the W.K. Kellogg Foundation, explains how hedge fund investments help the foundation fund charitable support children across the country.

Key Takeaways

  • The W.K. Kellogg Foundation’s mission is to improve childrens’ health and educational outcomes.
  • Hedge funds play an important role in the Foundation’s investment strategy because they generate consistent returns that provide capital to support children, families, and their communities. Thanks to investments in hedge funds, the foundation:
    • Manages over $8 Billion of capital;
    • Has over 1,400 grantees; and
    • Distributes over $400 Million in grants per year.
  • Even during periods of market volatility and economic headwinds, hedge funds provide reliable returns that allow the foundation to continue its mission.

Transcript:

[00.00-00.10]: The mission of the W.K. Kellogg Foundation is to improve outcomes for children when it comes to health and education, and improving the conditions of their families and communities as equitable places of opportunity.

[00.10-00.18]: The foundation manages over $8 billion of capital, has over 1,400 grantees, and we do almost $400 million in grants per year.

[00.18-00.23]: We have found that hedge funds play a very important role within our portfolio for a number of reasons.

[00.23-00.36]: First and foremost, they provide consistent returns. Second, they’re uncorrelated to market or economic conditions. And the third one is the liquidity that the portfolios provide, because the capital there is to serve children, and communities, and their families.

[00.37-00.45]: And in economic downturns, we want to make sure that we can pull some of that capital from our investments to be able to deploy them in communities at the greatest time of need.

[00.46-00.55]: These funds allow us to invest and maintain very long-term relationships with the confidence that we’re investing with teams that are highly, highly capable.

[00.55-01.02]: If you look at the returns that we had, in particular last year, the hedge fund portfolio was up 3% while equity was down 18%.

[01.03-01.09]: Every dollar of alpha return means an additional dollar of grantmaking that we can do to continue to improve outcomes for children.

[1:10-01.20]: Six years ago, we announced a historic investment into the public school system of Battle Creek to improve the educational opportunities and to ensure 100% success rates for the students.  

[01.20-01.32]: After six years of that program positively impacting the students going through that system, we’ve now announced a scholarship program, four years of college, paid 100% tuition and no fees.

[01.32-01.38]: We tend to make commitments for very long periods of time so that you know that you’re really moving the needle within a community.

[01.39-00.00]: Hedge funds play a very important role in helping us meet the long-term commitment to the children, families, and communities that we serve.