1st Quarter 2022 - Signature Fund Performance
Commentary provided by Spider Management Company
Since our last update, Spider Management (“Spider”) has received Q4 2021 valuations for private investments. Private investments represent a significant portion of Spider’s portfolio and were additive to final Q4 2021 returns, shown above. Spider’s private equity portfolio continued to be a primary contributor to performance for the quarter, driven by significant distributions from venture capital as well as private equity lagging public equity in their mark downs.
Turning to the first quarter, markets saw a rough start to 2022, as the world faced heightened geopolitical tensions, lingering impacts from Covid-19, higher inflation than seen in decades, and the apparent end of accommodative monetary policy. The war in Ukraine pushed energy prices to record levels, which increased already rising inflation. To combat inflation, the Federal Reserve took a tougher stance, signaling more interest rate hikes than previously announced. These factors led to a continuation of the rotation out of growth stocks, which had begun in the fourth quarter. The Signature Fund’s preliminary net return for the fourth quarter is -3.71%, compared to the 70/30 portfolio’s return of -5.50% in the first quarter. This preliminary return holds private investments at 0% for the quarter. Spider’s final first quarter return will likely decline from the preliminary estimate, as we expect to see write-downs in Venture Capital given recent performance of technology stocks. The Signature Fund’s preliminary 1-year net return of 10.56% compares favorably to the 70/30 portfolio’s return of 3.84%. Given recent volatility in the markets, the Spider team is pleased with preliminary calendar year returns and feels good about recent and forthcoming shifts in the portfolio. Spider began its rotation away from growth-focused managers in the middle of 2021 and continues to rebalance its holdings. They are focused on increasing their allocation to Real Assets and the Lower Correlation Strategies sub-portfolio within Absolute Return, which are typically less correlated to public equity markets.
1st Quarter 2022 - Vanguard Pooled Funds Performance
The following graph shows the performance of the Vanguard index options as of March 31, 2022. As expected, the index portfolios tracked in-line with the markets. Both stocks and bonds declined in the quarter, which is reflected in the similar performance across the three index blend options. The Socially-Responsible index blend underperformed in the first quarter as technology companies generally sold off and the energy sector saw strong performance due to rising oil prices.