Message from the President:
Diversification Is Key
This year we've had regular discussions with our Gift Fund donors looking for guidance on the best investment strategy for their Giving Account® balances in this troubled economy.
When asked this question my answer is always the same, in good times and in bad: a broad-based, diversified asset allocation strategy is, for me, the core principle of investing.
Sarah C. Libbey
Another key aspect to smart giving is periodically revisiting and rebalancing pool allocations based on individual charitable giving objectives that may change over time.
In fact, frequently changing investments based on market conditions is an almost surefire recipe for investment failure.
A Fidelity Investments research study, available below, demonstrates that most investors who try to time the market achieve the exact opposite of their intended outcome — increasing their allocations to stocks ahead of downturns, and decreasing their stock exposure prior to market rallies:
Stock Market: Exit at Your Own Risk — The Case for Staying Invested (PDF)
Missing out on just a few of the market's best days can have a significantly detrimental impact on your potential investment returns, as illustrated in this chart:
Portfolio Hazard: Missing Time in the Stock Market (PDF)
Of course, the proportion of stocks versus fixed-income in your Giving Account depends on your individual situation, your tolerance for risk and, most importantly, your time horizon for your granting activity.
As an additional Fidelity Investments study shows, keeping your money in cash is historically one of the least effective investment methods over the long term — even accounting for the stock market travails of 2008:
Is Diversification Dead? (PDF)
The recent stock market rally mimics historical patterns of investor behavior showing that a large percentage of a new bull market's total gain typically comes in the early months, while the economy remains in a recession, and when the above average number of bearish investors are heavily invested in cash.
In short, carefully considered diversification is still likely the way to go.
The Gift Fund offers a variety of investment pools to help meet your individual goals: Growth, Fixed Income, Money Market, or blended investment pools.
Learn more about the Gift Fund pools in the Investment Options section
President
Fidelity® Charitable Gift Fund
Access Market Analysis from Fidelity Investments
The Market Analysis, Research and Education (MARE) group, a unit of Fidelity Management & Research LLC, provides timely analysis on developments in the financial markets.
The Gift Fund has contracted with Fidelity Investments to perform a range of administrative and financial advisory services. These materials are provided to you pursuant to the Gift Fund's agreements with Fidelity Investments.