Information on Recent Stock Market Developments and their Implications to Zonta Foundation for Women
With the significant volatility in the global markets, driven over the past couple of weeks by the U.S. tariff policy changes, we would like to share the following information as we understand there may be questions and concerns regarding the Zonta Foundation for Women investment portfolio and the impact of the market on your donations.
Where We Are Right Now:
- Trade Tensions Escalated: U.S. President Donald Trump recently announced sweeping new tariffs, including a baseline 10% tariff on all imported goods and higher reciprocal tariffs for other countries, including China where tariffs of 145% have been imposed.
- China's Retaliatory Measures: In response, China initially imposed an 84% tariff on all U.S. imports, effective April 10, which has now been raised to 125%. China also introduced export controls on rare earth elements critical for high-tech industries and some additional actions to, in effect, pressure the U.S. into reversing course.
- Market Reaction: These developments have led to significant market volatility, which is not in itself out of the ordinary. Remember, the S&P 500 drops 14% each year from its highs, on average, and stocks experience an average of one correction each year. The impact on markets is not limited to the U.S. – all global stock markets have been impacted. What is out of the ordinary is the level of uncertainty and the destabilizing impact this is having right now. That’s about where we are right now.
What Might This Mean for Our Investments?
While these events contribute to short-term market volatility, it's essential to recognize that such fluctuations are a natural part of a market cycle. The Foundation’s investment approach remains focused on long-term objectives. Maintaining a diversified portfolio through the ups and downs can help navigate through periods of uncertainty.
- Diversification is Working: The Foundation’s portfolios are broadly diversified and were positioned with less risk than their policy benchmarks heading into this drawdown. Each portfolio is in-line with or outperforming its Policy Benchmark and holding up much better than global stock indices.
- International equity markets are up 3% year-to-date in U.S. dollar terms. Although many foreign economies will be trading less with the U.S., they are also more likely to enact stimulus, which investors are recognizing.
- The portfolios' allocation to global dividend-paying stocks has been a bright spot. The stock portfolio is down 1.8% year-to-date, outperforming the MSCI ACWI Index, a global equity index that measures the equity performance in both the developed and emerging markets, which is down 4.5%, and the S&P 500, the 500 leading companies listed on stock exchanges in the United States, which is down 7%.
Portfolio Rebalancing: The Foundation’s investment advisor maintained portfolio positioning through the downturn and was actively looking for opportunities to rebalance the portfolios and/or slightly add to equities and credit if the threatened tariffs were negotiated down, the economy and labor market held up better than expected, or there was another move down causing certain areas of equity and credit markets to look extremely cheap on a long-term basis. With news of a tariff pause, the Foundation’s investment advisor immediately looked for opportunities to rebalance the portfolios to policy targets.
Time horizon beats market timing: The portfolios are invested with a long-term time horizon, at appropriate risk levels.
- The average 10 Year rolling return on the S&P 500 since 1960 is 10.3% annualized, but in order to capture that return, long-term investors had to go through 4.3 technical corrections, 2.2 bear markets and 1.4 recessions on average.
- Since 1960, an investor that bought the S&P 500 index immediately after a 20% downturn earned an average of +16.7% total return over the next 12 months.
Moving Forward
Guided by the Investment Policy Statement, the Foundation actively follows the situation on a daily basis and has full confidence in our investment advisors, Capital Strategies Investment Group LLC, to closely monitor the situation, actively manage risk in the portfolios, and look to capitalize on long-term opportunities to support Zonta's long-term mission.
The current market situation is likely to continue for some time and it is important that we remain vigilant and make decisions that are consistent with our investment approach.
Now more than ever we need to continue the great work of Zonta worldwide. Please continue to make your donations and encourage others to donate, especially as we celebrate the 40th anniversary of the Zonta Foundation for Women. Please take a look at the campaign site here and make a donation: https://www.zonta.org/Foundation40. By sending your donations in a timely way we are able to optimize our investment approach and ensure we take advantage of any positive movements in the markets.
Should you have additional questions, please feel free to reach out to us so we can address them. Thank you for your continued support and all you do for Zonta!
Sincerely,
Salla Tuominen, President, Zonta International and Zonta Foundation for Women
Souella Cumming, Treasurer, Zonta International and Zonta Foundation for Women
Brandy Harrington, Chair, Zonta International and Zonta Foundation for Women Investment Committee
15 APRIL 2025