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Mellon Capital Management: Fixed Income Portfolio

Burning coal is a major contributor to climate change, which in turn, presents material long-term risks to our economy and to McKnight’s endowment.

Investment

$189 million bond portfolio; coal free originated in 2016

Rationale

Given that McKnight made over $160 million in grants to organizations advancing a low-carbon future since 1992, long-term bond exposure to coal was an area of misalignment between our philanthropic goals and our endowment. This broad fixed income portfolio investing in government, corporate & mortgage-backed securities is now coal-free.

Benchmark

Blended fixed income benchmark; Meets its benchmark

Returns

Coal-free portfolio meets its benchmark, portfolios of $189 million as of Q3 2017

Lessons Learned

Abundant Choices: McKnight’s fund manager Mellon Capital Management was a helpful partner in scrubbing coal from our portfolio. This portfolio screens out pure-play coal as well as mining and other companies with underground coal reserves. The fund manager only had to sell 8 bonds valued at $1.6 million from the 1,500-bond portfolio.

Coal-Dependent Communities: Our impact investing program has exciting opportunities to invest in clean energy, and it’s also essential to support coal dependent communities that are reinventing their economies.

As of November 2017

Disclaimer of Endorsement: The McKnight Foundation does not endorse or recommend any commercial products, processes, or service providers.