Yale's Charitable Trust Program
Investment
Yale's Office of Planned Giving, in consultation with the Yale Investments Office, directs the investment and administration of over 100 charitable remainder trusts for which Yale serves as trustee. Although trusts are not invested with the Yale Endowment, Yale uses many of the same asset management and allocation strategies that have been successful in investing the Endowment.
Trusts are primarily invested through commingled investment pools operated by Yale especially for charitable trust investments. The Yale Equity Pool is a diversified portfolio of stocks representing both domestic and foreign holdings. The Yale Fixed Income Pool invests primarily in United States government bonds. Asset allocation of individual trusts among these stock and bond pools is typically made according to three standard strategies: “Growth” strategy is the most aggressive and averages 75% equities and 25% bonds; “Balanced” is 50% equity and 50% bonds; “Stable” is more conservative, comprising 25% equity and 75% bonds. While these allocations represent average holdings, Yale adjusts allocations periodically according to expectations of risk and return characteristics of the various markets and sectors. Yale selects the appropriate strategy by considering the expected duration of the trust, the income payment required, and the beneficiary's unique risk tolerances and needs.
Yale selects investment managers for pooled assets typically from among firms having a relationship with Yale in managing Yale's Endowment. Individual trust accounts therefore have access to firms that typically accept only large institutional portfolios. Yale currently employs Grantham, Mayo, Van Otterloo and Co. LLC of Boston as the primary manager for the Equity Pool and BNY Mellon Wealth Management as the primary investment manager for the Fixed Income Pool. Investment management fees currently average approximately 65 basis points (6.5 tenths of one percent of assets) annually. These fees are charged against the invested principal of the trust.
Administration
Yale retains BNY Mellon Wealth Management to serve as trust administrator and custodian. BNY Mellon manages each individual account, making beneficiary payments and providing quarterly account statements and annual tax reporting for each trust. For these services, each account is currently charged $875 per year. This fee is substantially below that which comparable banking institutions would charge the individual trusts. The Office of Planned Giving carefully oversees the trust program and provides beneficiaries with annual summaries of investment results and trust valuation. Both BNY Mellon and Yale Office of Planed Giving are available throughout the term of the trust to answer questions and to serve the needs of all trust participants.