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Investment Objectives

The Murdock Trust divides all potential investments into either low, medium or high “risk buckets” and considers all types of investment products — without preconceived ideas or built-in biases — for all three categories. Our investment objectives follow directly from this “three-bucket” allocation strategy.

Total Return

Our primary investment objective is to achieve the total return necessary to maintain the “real value” of assets, with limited risk, over a long period of time so that the Trust will function in perpetuity without diminished capacity. Real-value asset growth, to a modest extent, is our secondary objective. 

Strategic Asset Allocation
To achieve the Trust’s long-term goal, we’ve adopted an efficient strategic asset allocation with a reasonably stable distribution of assets among three classes (or “risk buckets”):

 

Target Range Expected Return
Risk Bucket I (low risk) 10% 0-20% 2-5%
Risk Bucket II (medium risk) 55% 40-70% 5-9%
Risk Bucket III (high risk) 35% 20-50% 9-14%
Total 100%  6-10.5%

Deviations from target, within the range, will be permitted without action and are generally the result of transitioning in and out of asset classes and short-term performance variations. Deviations outside the range should result in adjustments in cash flow or other actions to move toward the target allocation within a reasonable period of time.

Investment Management
Outside investment professionals manage all Trust assets. (View our current investment managers here.) To either add to the mix or to displace a current investment manager, new opportunities must be compelling from either a return or a risk reduction perspective. To displace a current investment manager, a product must have the potential to generate an absolute return greater than that produced by our existing managers in each risk bucket.

Diversification/Risk Control
To control risk and minimize permanent loss of capital, the Trust diversifies investments both among and within risk buckets, to the extent deemed necessary to reduce risk to an acceptable level for the expected return. We monitor outside investment managers to assure that risk is within acceptable limits and consistent with expectations. Manager exposure is limited to no greater than 20% for any one manager.

For more information, please read our complete Statement of Investment Policy (PDF download).

Review other aspects of the Murdock Trust investment program on the administration, managers and guidelines pages.