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A Nearly 100-Year-Old OCIO Firm Levels Up

HighGround Advisors was once a small Baptist foundation. Now, it’s insourcing more investments and adding new nonprofit clients.

Since 1930, HighGround Advisors — once known as the Baptist Foundation of Texas — was a mainstay in money management for local churches and religious nonprofits.

These days, the outsourced chief investment officer firm still manages assets for Baptist-related organizations, but it’s growing both in clientele and investment prowess.

With assets sitting at $2.5 billion, the group’s recently beefed-up investment team manages capital for a wide variety of nonprofit organizations — and they have big plans for 2023.

In August 2021, Helge Rokenes joined HighGround just a few months before outgoing chief investment officer Joe Wright officially departed the organization. Prior to joining, Rokenes had spent seven years as a managing director at the Meadows Foundation, a family office based in the Dallas/Fort Worth area.

“It’s a good mix of client interaction, building out the team, transitioning the capabilities in-house,” said Rokenes of his relatively new role. “It’s a high-quality organization. It’s been managed really well. It was a very attractive proposition.”

Rokenes joined longtime investment team members Carol Kilman, who has been with the foundation since 1991, and Peter Case, who joined in 2015. Over the past year, he has brought in Philip Godfrey from New State Capital Partners as director of private markets, Steven Thieme from Fund Evaluation Group to lead public markets, and Michael Duncan to serve as an investment analyst.

With the updated team assembled, HighGround Advisors got to work moving its investment portfolio ahead.

“Asset allocation is front and center for us,” Rockenes said. “We use a standard mean-variance optimization framework. Most of our clients have a similar return objective that can support a 5 percent annual payout while covering inflation and expenses. We target a portfolio we believe can achieve this goal while minimizing volatility.”

Roughly two years ago — ahead of the surge in inflation and interest rates — HighGround added exposure to liquid real assets, including infrastructure and natural resource equities, infrastructure credit, and TIPS. According to Rokenes, that helped ballast the portfolio against some of the bear market’s harshest effects.

While that timing was fortuitous, HighGround is generally not focused on shifting assets around. “We try not to get caught up in market timing,” Rockenes said. “We could see a recession next year, and the Fed is continuing to drain liquidity out of the system, which tends to be a difficult time for risk assets. We focus on having a well-balanced portfolio that can withstand both a period of continued high inflation and a scenario where a recession brings deflationary pressures.”

His team is currently in the process of adding private credit to the portfolio, with an initial focus on senior secured direct lending.

As for public debt, HighGround doesn’t think the timing is right. “Even though absolute yields in the high-yield market are attractive given that the risk-free rate has moved higher, credit spreads still aren’t at historically high levels,” Rokenes said. “We’ve mapped out managers to get into if we get excited about that.”

The group is also working to bring its hedge fund allocation in-house, moving from a fund-of-funds structure to selecting general partners itself.

“We’re not too big, so we can go and seek out the best money managers that might be capacity constrained,” Rokenes said. “Many GPs resonate with our well-articulated, mission-driven story.”

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