Measuring the Common Fund's Performance

Each year the Moravian Ministries Foundation looks beyond the usual measures, such as benchmarks and the like, to see how our investment returns compare with those of similar endowments and foundations. This effort helps us ensure the churches and agencies who participate in the Common Fund are getting the best returns. We will not be number one every year, but being among the top performers is a goal we strive to achieve.


Every year in late summer we conduct our “Annual Peer Review” which looks at the returns of our Growth Portfolio in comparison to other faith-based and community foundations. Most of you receive this study; if you haven’t, I’d be delighted to provide you with a copy.

Each year, since the inception of the study in 2013, the Growth Portfolio has ranked #1! We are obviously proud of what the data tell us.

The Peer Review is followed by another study, which looks at over 700 college and university endowments called the “NACUBO Study of Endowments”. NACUBO is the trade name for the college and university endowment and business managers’ association. While the Foundation does not belong to this association, and does not participate in the study, the data are easily available for us to use and analyze.

One challenge we face in both studies is to make sure it is an “apples to apples” measurement; this is most evident when comparing investment returns. We, the Moravian Ministries Foundation, report our returns with all our fees and expenses deducted; this is called “net of fees”. We deduct what we pay Kaspick and Company AND what the Foundation charges from the total investment return and report this percentage to you as your ministry’s return on investments. In our view churches and agencies need to know how much they are making on their investments and what they have to spend. Therefore, we strongly believe the “net of all fees” return is the most accurate measure.

Most other institutions and endowments report their returns “net of external fees”, which means they have deducted the costs for their investment manager(s), transaction costs, and the like; however, they have not taken into account their “internal” expenses such as staff expenses related to managing their endowments, their accounting and recordkeeping costs, etc. In some cases, these expenses can be nominal; in other cases, they can be significant. A random survey reveals that these internal management expenses can run between 1% and 2% of the value of the invested funds. In other words, an institution that reports its returns “net of external fees” of 5.5%, may have returns of “net of all fees” of 3.5% to 4.5%. These institutions and endowments have good reasons to do it this way. However, it is an important difference to keep in mind as we study returns and results. All Common Fund fees are deducted prior to reporting our returns.


With all this said the question on the table is: How did the Common Fund do, relative to the 700 college and university endowments over the ten-year period ending June 30, 2016?

Well, despite how we differ in counting and deducting fees, and simply comparing reported investment returns:

  1. The Growth Portfolio’s investment returns place the Moravian Common Fund among the top 25% of all 700 college and university endowments.
  2. Of endowments in our asset size range ($100 million to $500 million), the Moravian Common Fund substantially outperformed the group.
  3. Looking at private college and university endowments, the Moravian Common Fund also substantially outperformed the group.
  4. Finally, compared to public college and university endowments, the Moravian Common Fund - again – substantially outperformed.

Please remember, for example, a 1.4% difference during each of the past five years translates into 7% total difference in total return for the entire period. On an investment of $100,000, this translates into $7,000 over five years and $70,000 on a million-dollar investment. It is a lot of money! 

In other words, and this is not hyperbole, the Moravian Common Fund is currently and consistently among the top performing US endowments!


How do we accomplish this? To begin, we have a great partner in TIAA/Kaspick and Company. Their team is terrific.

The second reason is tied to the first. We believe in the Warren Buffett axiom – If we don’t understand and can’t explain the investment, we don’t own it. While I can’t look at every institution in the report of colleges and universities, the summary data shows that approximately 50% of all endowments are invested in so-called “alternative strategies”. What are these strategies? Hedge funds, venture capital, commodities (oil, natural gas, crops…) and other such things. When you step into this area of investments, there are tons of ‘opportunities’, but even greater risk. Hedge funds, as a group, have proven to be very challenging for investors over the last few years.

The Common Fund, on the other hand, invests in low cost mutual funds, with a mix of active and passive products and a rich diversity of managers and market segments. This, coupled with thoughtful market and investment research, contributes to our results.

Lastly all the Common Fund portfolios lean more towards “value investing” versus “growth investing”. While there are periods when the growth investor does well, the best-known value investor is, again, Warren Buffett, who looks for good companies where the stock price is “cheap” and undervalued. Historically value investors do better than growth.


In summary, and using a baseball analogy, the Common Fund is among the league leaders in batting. We are also hitting lots of home runs and have made very few errors. Most importantly, as a team we (your church/agency, along with TIAA/Kaspick and Company and the Foundation) are repeat visitors to the World Series. Our goal is to be the best low-cost investment and endowment manager and we remain firmly committed to achieving this.

If you would like for me to come to a meeting or wish to just talk, please call me at 888.722.7923. And, of course, thank you for your confidence in the Foundation by investing in the Common Fund.   

Paul McLaughlin