JFed: agency unaffected by Madoff investment scandal

Jewish Federation of St. Louis reassured the public that the agency’s investments were not affected by the Bernard Madoff scandal.

“Investors who have established planned gifts and endowments with The Jewish Community Foundation of St. Louis, which holds the endowment funds for Jewish Federation and many of its agencies, can feel confident their investments are safe,” said a statement released by JFED. “Jewish Federation consultants have confirmed JCF endowments had no exposure to funds managed by Bernard Madoff.”

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“In light of this financial tragedy, we especially appreciate the excellent group of volunteer leaders who governs Federation’s investment process on behalf of our Jewish community,” said JFED President Sheila Greenbaum. “At the same time, Jewish Federation is truly saddened for the many people and institutions who are suffering losses due to these terrible schemes.”

The statement noted that Federation’s Investment Committee, chaired by John Kalishman, employs an external consultant — Fund Evaluation Group — to advise on highly diversified investment strategy, asset allocation and to evaluate and monitor individual investment managers.

There is a very thorough process in place to make any financial decision that impacts Federation’s portfolio, said Kalishman. “Our investment policy specifies that we can only invest in managers who have been thoroughly vetted and approved by our external consultants. We rely heavily on their research and due diligence to insure that any investments we make are with highly-skilled, financially-sound and experienced investment managers. We have utilized Fund Evaluation Group for many years and our investment committee has a high degree of confidence in these consultants.”

At the same time, Kalishman said, our investment committee is on top of what’s going on. “We perform ongoing assessments and evaluations of Fund Evaluation Group’s internal processes and capabilities. Fortunately we have a very involved and committed investment committee comprised of 15 members including veteran community leaders, community members who are industry investment professionals, and representatives of the larger Federation agencies that invest with us such as the Jewish Community Center and the Jewish Family & Children’s Service.”

Kalishman also explained that many of the organizations and institutions most severely impacted by the Madoff tragedy had substantial levels of investments with him. “These are levels that far exceed any percent of our funds that we’d put with any single manager. In fact, a cornerstone of our investment policy is to maintain a portfolio that is well diversified, not only across different asset classes, but also across individual managers to avoid a Madoff situation. In the unlikely event that something like this would happen to one of our managers, I believe it would not have a significant impact on our overall portfolio.”

“For those who might be concerned about how Federation’s portfolio is positioned going forward,” Kalishman added, “Federation is holding a substantial amount of cash going into next year, but well within the guidelines of our investment policy. The additional cash in our portfolio will ensure that Federation and its agencies are able to meet cash needs in 2009,” he said.