DCF portfolio update may benefit Mena

17 Jan 2012

The Delaware Community Foundation (DCF) is preparing to reshuffle its investment portfolio, and is in discussions regarding Mena allocations, Mena FM can reveal. 

The $144m DCF will make its final investment decision in February, but is likely to maintain significant emergingmarket exposure, according to Richard Gentsch, the DCF’s executive vice-president. “What we’re looking at for our overall philosophy, as with everyone in this day and age, is to lower volatility, and still maintain some kind of returns. 

“So what we decided to do on the equities side was to go into emerging markets with an emphasis on South America and the Far East in order to get some  of those returns based on the economies in those areas,” he told Mena FM. “But we’re not limited to South America and Asia, although some of our managers are restricted to those markets. There have been discussions about other regions and Mena has definitely been brought up.”

The firm already has some exposure to Mena through the Eaton Vance Tax Managed EM Fund, which has a 4.7% share of the foundation’s portfolio. The Eaton Vance Tax Managed EM Fund portfolio was 1.59% exposed to Egypt, 7.99% exposed to other Middle East and 4.57% exposed to other Africa (ex-South Africa) at 30 November 2011.

Notably, the DCF reduced its overall equities exposure cutting the allocation from 48.9% to 38.6%. Within its equities allocation DCF reduced its exposure to Lazard Emerging Markets Portfolio after the end of June 2011, reducing it from 6.6% of the portfolio to 4.7%. 

Gentsch added that making investment decisions based on market performance at this time is not an easy process. “At the time we made the decision, and you have to understand that our investment committee meets quarterly, so there’s a quarter to six-month lag in between, so when we sat and made the decision they were looking at those markets and those markets were on the positive side. 

“But a lot has happened since then and we’ve stayed the course and we still feel that our selections in emerging markets are still good and that we’re going to stay the course with the asset allocation that we have,” said Gentsch. 

At the end of September 2011 the DCF’s portfolio was split into equities, fixed income, inflation hedge and flexible capital. The largest weighting was  towards equities, amounting to 38.6%, then fixed income with 21.5%, flexible capital 20.5% and lastly inflation hedge with 19.4%.