What we saw: The first quarter served as a reminder of how fast market sentiment can shift. Volatility returned to equity and fixed income markets late in the quarter as concerns for slowing economic growth, inflation and tariffs mounted.   

After a positive start to the year, US equities declined significantly to close out the quarter. The Russell 3000 fell 5.8% in March and 4.7% year-to-date, while the S&P 500 lost 5.6% in March and 4.3% year-to-date. The losses, while significant on a weighted basis, were confined to a narrow sleeve of sectors and mainly in technology and consumer discretionary. Equity sectors such as health care and energy were positive for the quarter. 

The first quarter also marked a notable shift from “US exceptionalism” as investors continue to assess the impact of trade tariffs and public service job cuts on the US consumer and the potential for a recession. International equity outperformed US stocks, aided by a weakening US dollar. Developed international markets (EAFE) were down 0.4% in March, but up 6.9% year-to-date. Emerging markets gained 0.5% in March and 1.7% year-to-date. Addressing a potential economic slowdown in the US will be tough, as the Federal Reserve tries to balance a dual mandate of full employment and price stability, while being constrained by already elevated inflation levels and additional inflationary pressures such as tariffs. 

Fixed income was mostly positive for the quarter and served as a valuable diversifier. This broke a trend of fixed income returns essentially moving in parallel with equity returns following the 2022 bear market. The US Aggregate Bond Index was flat in March, but up 2.8% year-to-date. US Treasuries outperformed for the quarter, with yields falling (and prices rising) in response to weaker economic activity data. The potential of prolonged inflation and steady healthy labor market data led the Federal Reserve to leave rates unchanged. Throughout the quarter, the US dollar decreased by 3.9%. The March payroll report came in stronger than expected, with 228,000 jobs added versus an expected increase of 140,000. Further, the US Federal Reserve (Fed) cut its US growth forecast for 2025 to 1.7% from 2.1%. and lifted its inflation outlook to 2.7% from 2.5%. Consumer sentiment decreased significantly for the quarter.    

Performance of NCCF investment managers: Most NCCF investment managers saw mild gains or losses for the quarter. Returns were positive over the long term, with most managers averaging around 5% returns at the one- and three-year intervals and even higher for longer durations.  

During periods of extreme uncertainty, it is best to take a long-term perspective. While the exact timing or nature of large market downturns cannot be predicted, they happen regularly. NCCF and our investment managers take great care in creating diversified portfolios that enable the foundation and our fundholders to achieve their long-term philanthropic goals despite bouts of market volatility. Maintaining a long-term investment strategy is essential during uncertain times, as robust investment performance over the long term relies on a consistent and disciplined approach. 

More market commentary is available from NCCF’s investment advisor, Graystone Morgan Stanley. For investment information specific to your fund, please contact your Donor Engagement Officer or email support@nccommunityfoundation.org.  

NCCF investments updates: We have updated our Investment Policy Statement and made clarifying name changes to our two largest investment pools to help donors align investments with their goals. The IPS continues to reflect our investment philosophy and objectives: to preserve and protect historical endowment contributions indefinitely, while providing an average return that covers an annual grant or scholarship distribution, fund operating costs and inflation. 

The foundation’s long standing flagship endowment investment option is now called the Long-Term Diversified pool to better convey material allocations to alternative asset classes outside of publicly traded assets in the form of semi-liquid and private investments.  This pool, formerly called the NCCF Investment Fund, is designed to reduce volatility and is for fundholders who have a moderate risk tolerance. It is benchmarked by our Broad and Diversified benchmarks. 

Our second largest investment pool is now called the Long-Term Growth pool to clarify its focus on capital appreciation through a high allocation to global publicly traded equity. This pool, formerly called the First Citizens fund, is designed for fundholders who have a higher risk tolerance and is benchmarked by our Broad and Blended benchmarks. 

Together these pools are the primary options for funds invested at NCCF.  

Investment Returns 

	1-Year	3-Years	5-Years	10-Years	15-Years
Long Term Diversified Pool	4.8%	4.1%	10.5%	5.8%	6.7%
Benchmark – Diversified	5.6%	4.5%	10.2%	6.4%	7.0%
Long Term Growth Pool	6.6%	6.0%	12.9%	7.6%	8.4%
Benchmark – Blended	5.3%	5.0%	10.8%	7.3%	8.4%
All Managers (Net Weighted)	5.4%	4.6%	10.9%	6.4%	7.3%
Benchmark – Broad	6.5%	5.1%	10.5%	6.8%	7.1%
Benchmark – Broad: This benchmark represents a general approach to investment. 70% MSCI All Country World Equity Index , 30% Bloomberg Barclays Aggregate Bond Ind
Benchmark – Diversified: This benchmark represents a diversified approach to investment with material allocations to a combination of private equity, private debt, and alternative investments. 24% MSCI ACWI ex US, 20% S&P 500, 10% Russell 2500, 18% Bloomberg Barclays Aggregate Bond Index, 10% HFRI FOF index, 6% MSCI Infrastructure, 6% Cambridge Private Equity, 4% Barclay CTA, 2% Cambridge Private Debt
Benchmark – Blended: This benchmark represents a diversified approach to investment in public markets. 35% R1000, 15% Russell Midcap, 5% R2000, 10% MSCI EAFE Net, 30% Barclays Govt/Credit Bond, 5% FTSE Treasury Bill 3 Month.