The Endowment is permanent capital fund that seeks to give solidity and continuity over time to the activities of the Foundation. It allows to undertake future projects, in many cases of an innovative and long-term nature, by providing a stable source of income that can be devoted to strategic projects. The Endowment grows mainly through new donations.
The Endowment is managed so that future generations will have at least the same capacity for action as the present generation (intergenerational equity). To this end, part of the profit (interest, dividends, capital gains, etc.) is reinvested back into the fund itself, so that purchasing power is not lost due to the effects of inflation. Therefore the impact of a donation is permanent.
The IESE Endowment is committed to the principles of socially responsible investment, and seeks to invest in funds or initiatives that promote environmental care, social responsibility, and ethical governance practices.
To manage financial investments, the Board established the Investment Advisory Committee.
The Investment Advisory Committee offers its recommendations to the Board: proposes profitability and risk objectives, defines financial assets, selects external consultants and fund managers, and advises
on all aspects management of financial assets, always within the framework overall risk/return approved by the Board.
The committee is made up of investment experts. The group meets regularly to share analyses and make recommendations.
The investment committee members are:
MBA’84 / Managing Director of Alcarama
Eusebio Díaz Morera
MBA’69 / President of EDM
Francisco García Paramés
MBA’89 / President of Cobas AM
Professor of Financial Management, IESE
MBA’90 / Managing Director of Abaco Capital
MBA’01 / Head of European Private Client Practice, Cambridge Associates
CIO Tiriac International Foundation
Juan José Toribio
Emeritus Professor of Economics, IESE
Jaime Alonso Stuyck
Committee Chairman Director of the IESE International Foundation
The Board of Trustees is ultimately responsible for managing the Endowment, for which it approves the Investment Policy, which sets the investment objectives and the acceptable risks as well as the fundamental rules and criteria that must be taken into account in its management.
The Investment Policy establishes the general objective of achieving a balance between these three aspects, in order of importance:
- preserving the purchasing power of the fund in the long term;
- distributing a certain percentage of the fund each year to finance activities, via a mechanism that provides a certain stability;
- maximizing the profitability of the Endowment in the long term.
Furthermore, the Policy establishes the Strategic Asset Allocation, that is, the percentage distribution of assets by class for which it must aim. For each percentage, tolerance bands are established so that, within these margins, the Investment Committee determines at all times the amount invested in each class and considers a possible rebalancing on a quarterly basis. For each class, a benchmark is also established by which the efficacy of the investments made is measured. For the Endowment as a whole there is an active and a passive benchmark.
To better fulfill its mission, the Board of Trustees has asked the Investment Committee to try to maximize the profitability of the Endowment, but in a manner consistent with the principles of Responsible Investment. To do this, it has approved a specific policy to ensure that investment activity is aligned with the mission and values of the Foundation.
Ethical and responsible investment
The Endowment has an eminently social character in that all its returns are allocated to research projects and scholarships, so as to promote academic and social development.
The Foundation is aware of the environmental, social and good governance (ESG) risks arising from aspects as varied as sustainability, human rights, discriminatory practices, child labor, bribery, corruption, etc. It also understands the ethical implications of some decisions related not only to investment practices, but also to the principal activity of some companies and its impact on society.
However, the Endowment does not make investments through direct participation in the share capital of companies, but rather by channeling it through ETFs and funds. For this reason, it has not established a list of excluded companies (negative screening) based on ethical criteria, ESG or responsible investment. However, in selecting these vehicles, the Investment Committee tries to fulfill those criteria, and as part of the prior due diligence, it has a list of questions for the managers that it employs as a further element of the selection.
In addition, it expects external managers to engage with companies through judicious and transparent exercise of voting rights and informal dialogue to encourage ethical behavior and a better management of ESG risks and opportunities.