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Small Foundation

For the past 23 years, James ­Martin, CIO of the M.J. Murdock ­Charitable Trust in Vancouver, Washington, has been quietly refining his approach to risk.

James Martin

For the past 23 years, James ­Martin, CIO of the M.J. Murdock ­Charitable Trust in Vancouver, Washington, has been quietly refining his approach to risk. The process has been evolutionary, not revolutionary, but the results have been remarkable: Over the past two decades, the foundation has delivered an annualized return of 14.81 percent, through December 2009.

Even in 2008, when the S&P 500 index plummeted by 37 percent, the endowment lost just 6 percent. Last year it rose 17.63 percent. This consistent performance reflects the CIO’s “risk-based” approach to asset allocation. Martin, 62, seeks managers and investment products with low-, medium- or high-risk characteristics and groups them into three risk buckets: capital preservation, equity/real estate and alternative assets.

“I want to give managers the maximum freedom to deliver the highest return possible within a certain spectrum of risk, without any preconceived ideas or constraints on our part,” he says. It appears to be working.

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