Questions for Institutions

What are the fundamental goals for the portfolio related to growth and spending capabilities?

As a fiduciary, it is critical to have clarity around the goals of the portfolio so that investment allocation decisions can serve the purpose of the institution. Diversified Trust draws upon a seasoned team of professionals to design and implement portfolios which sustain the missions of our client institutions. We offer acumen and experience honed over decades. This allows us to see and—more importantly—advance an institution’s vision.

Founding Purpose

From its inception, Diversified Trust has served as an Outsourced Chief Investment Officer (OCIO) for its core institutional clients by offering integrated policy, governance, investment management, custody, reporting, and operational services. Our goal is to take as much work off the shoulders of our clients' Boards, Committees, and finance department staff as possible, and to share in their fiduciary responsibility.

Client-Specific Servicing

As a result of our select institutional client base, our specialized service, and our dedicated systems, we are able to provide exceptional service and focused resources in support of the unique needs, structure, and mission of each client.

Outsourced CIO Services

The popularity of Outsourced Chief Investment Officers (OCIOs) has seen a significant growth in recent years.

By using an OCIO, institutional investors transfer discretionary investment authority to an outside firm to manage some or all of the investment functions typically performed internally, such as asset allocation, manager selection and onboarding, custody, investment operations, and performance monitoring. An OCIO has the time, resources, and expertise to manage the full spectrum of critical investment tasks.

The OCIO typically assumes broad discretion in setting up and managing the portfolio, including:

  • Tactical allocation positioning
  • Manager selection
  • Diversification within classified/risk buckets
  • Taking advantage of unexpected opportunities with a pre-determined percentage of the portfolio
  • Investment cost management
  • Performance reporting
  • Custodian management
  • Risk management
  • Tax management (if applicable)

Client Q&A

What does it mean to be a fiduciary?

The technical definition of the word “fiduciary” is someone who stands in a special relation of trust, confidence, or responsibility in certain obligations to someone or something else.  This means being bound ethically to act and make decisions in the best interests of a client — with care, prudence, good faith, and trust — in everything we do.

How and how often do you engage with your institutional clients?

While every institution, Board, and Finance/Investment Committee is different, we believe that the most successful investment advisory relationships involve frequent, recurring contact.  So we recommend consistent, face-to-face client meetings on at least a semi-annual basis, but preferably quarterly.

How are you able to help your institutional clients’ finance department staff members?

Diversified Trust’s job is to share in the fiduciary responsibility of managing and caring for the investment assets and shouldering as much of the operational and administrative burden that this creates. This may include manager due diligence, hiring/firing, fee negotiation, custodian management, portfolio management, proxy voting, subscription document completion, and general investment market awareness.

Touching Every Piece of Your Investment Program

Our institutional clients include public and private foundations, endowments, nonprofits and retirement plans.

A significant portion of the careers of our professionals has been devoted to managing and overseeing large pools of institutional assets. We provide the advantage of our extensive direct experience with universities, independent schools, foundations, and public charities.

Our OCIO Services Include:

Investment Policy

Drafting of return objectives, risk parameters, asset allocation guidelines, eligible investment definitions, liquidity guidelines, and communication expectations.

Spending Policy

Consultative guidance on an appropriate spending policy to account for investment earnings, expenses, and annual support obligations, as well as specific calculation methodology that balances the spending needs of the organization with the long-term sustainability of the asset base.

Investment Management Execution and Oversight

Access to sophisticated investment tools and disciplined portfolio management strategy designed to deliver the investment returns and risk controls our clients need.

Reporting and Communication

Thorough, clear reporting on policy adherence, performance, asset allocation, cash flow analysis, transactional history, risk insights, and qualitative information relative to the achievement of long-term objectives.

Planned Giving Initiatives

For nonprofit clients, we help design and implement various gifting vehicles including donor advised funds, gift annuities, and charitable trusts. We also work directly with prospective donors to answer questions about investment strategy, beneficial gifting strategies, and how best to positively impact the charities and institutions they want to support.

Diversified Trust realizes our institutional clients' visions by forging valued, fiduciary-based relationships focused on sustaining mission.

Balancing Risk and Opportunity

“The professionals at Diversified Trust are involved on multiple boards within their communities. They offer significant credibility and a spotless reputation.”

-Partner of an Institutional Investment Consulting Firm

After a stringent due diligence process, we retain unaffiliated, highly-specialized institutional investment managers and integrate them into our proprietary portfolios.

A seasoned, dedicated team of Diversified Trust Principals and Directors form the Investment Committee responsible for extensive, ongoing due diligence and oversight of asset allocation recommendations, investment strategies, and investment advisors.

While investment objectives vary among our clients, a well-managed investment portfolio typically possesses the following primary characteristics:

  • Clearly defined objectives
  • Broad exposure to different sources of return
  • Multiple specialized investment strategies and managers
  • Clear measures of correlations and risk
  • Sophisticated due diligence and oversight
  • Long-term time horizon

The Diversified Difference
Fiduciary partnership, outsourcing of specialized responsibilities, and realization of institutional investment objectives is where real differation is achieved.

Managing Volatility

Why is it so important?

There are two crucial benefits of managing volatility, particularly for organizations with fiduciary responsibilities. First, it reduces the probability that a board or committee will change portfolio strategy in reaction to a difficult market environment. Second, and perhaps more compelling, portfolios with lower volatility generate more distributable cash. This is in part because the avoidance of loss prevents the need to “battle back” and provides for consistent budgeting ability.

Consider the chart below which illustrates this point.

Annual Distributions over 25-Year Timeframe


The reality of the law of compounding is that a percent of loss is more significant than a percent of gain. As an extreme example, if I experience a 50% loss and a subsequent 50% gain, I only get half way back to being whole. So limiting downside risk is vitally important to both long-term capital preservation and capital growth.

Consistent Spending Ability

Recurring draws from an endowment or gifting from a foundation typically represent essential annual budgetary support for the ultimate institutional beneficiary. So stability, predictability, and sustainability of that spending support is vital to long-term success.